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IRS TO MAKE $10,000 PENALTY FOR LATE FILING FOREIGN OWNERSHIP DISCLOSURES 'AUTOMATIC'
September 04, 2008
A friend forwards a rather chilling "Dear Taxpayer" letter. It seems that a C corporation missed a return deadline sometime in the murky past. Their letter begins:
Our records indicate that you late filed Form(s) 1120 (UI.S. Corporation Income Tax Return) with attached form(s) 5471 in a prior year...
...IRC Section 6038(b)(1) provides for a monetary penalty of $10,000 for "each 5471 that is filed after the due date of the income tax return (including extensions) or does not include the complete and accurate information described in Section 6038(a).
...
Beginning January 1, 2009, the Internal Revenue Service Center will automatically assert appropriate penalties on late filed Forms 1120 with froms 5471 attached.
Harsh. Many times these forms are pretty much plain vanilla, and there are often only minor and insignificant intercompany items to report. Horrible penalties for clerical oversights by an otherwise compliant taxpayer make no sense. They presumably are doing this to police international transactions, but it's like shooting speeders going 56 in a 55 zone because the guy who robbed the bank was speeding during his getaway.
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Comments
Hey Joe, thanks for the post.
I guess the IRS will assume that the failure to file was "willful" and then force taxpayers to file for penalty relief.
Let's pray the IRS grants penalty relief in appropriate cases.
Posted by: Peter | September 5, 2008 11:51 AM