Statute of Limitations

• Author: Seymour Goldberg
• Profession: Senior partner in the law firm of Goldberg & Goldberg, P.C., Woodbury, New York
• Pages: 134-134

134

STATUTE OF

LIMITATIONS

The IRS may generally assert an IRA penalty at any time based on the

2011 Tax Court opinion, Paschall v. Commissioner, 137 T.C. No. 2, July 5,

2011. Although the IRA penalty in that case involved an excess contribu-

tion penalty, it would apply to most other IRA penalties as well.

According to the Tax Court opinion, if an IRS Form 5329 is not

filed, then the IRS can assert an excess contribution penalty at any time.

This Tax Court opinion can create a problem for many practitioners

since it has wide reaching implications.

In essence, if an IRA owner fails to receive a timely required mini-

mum distribution or the beneficiary of an IRA fails to receive a timely

post- death required minimum distribution, then the practitioner should

recommend that the IRA owner or beneficiary take corrective action and

file an IRS Form 5329 and request the IRS to waive the 50% penalty

regarding the shortfall of the required minimum distribution. The IRS

has the authority to waive the 50% penalty but not other IRA penalties.

See IRS Form 5329 and instructions to IRS Form 5329.