Automatic penalty assertions begin for delinquent Forms 5471.

• Author: Gurene, Linda

The IRS posted to its website guidance encouraging taxpayers to submit delinquent Forms 5471, Information Return of U.S. Persons with Respect to Certain Foreign Corporations, before January 1, 2009--the date on which the Service began to automatically assert appropriate penalties under Sec. 6038 on late-filed Forms 1120, U.S. Corporation Income Tax Return, with Forms 5471 attached. In August 2008, the IRS began mailing "soft letters" to corporations that had, during the past two years, filed a late Form 1120 that included at least one Form 5471, to inform them of the new automatic penalty assertion procedures.

Implications

Although the Service has not historically focused on Sec. 6038 penalties for late-filed Forms 1120 with Forms 5471 attached, the increased number of Forms 1120 being filed electronically has enabled the IRS to determine quickly which of these returns are late filed and therefore potentially subject to penalty. The automatic assertion program seems to be one way that the IRS is responding to TIGTA's criticism of the...