IRS & Authority Over Informational Forms

This is a relatively important ruling in the courts, so important it might be headed to the Supreme Court if the taxpayer further challenges the ruling.

The DC Circuit Court has overruled the Tax Court on whether or not the IRS can assess and collect penalties on foreign information returns that aren’t filed.

The penalty in question this case addresses is penalties under 6038(b) and the ability for the IRS to collect under 6201(a). Currently, there is a flat-fee penalty of $10,000 for each failure-to-file. 

The taxpayer who contested the IRS’s authority to assess and collect on this penalty owes the IRS $500k for years of failing to file information returns on his controlling interest in two Belizan corporations.