Navigating the IRS Penalty Abatement Procedures for Foreign Information Reporting Noncompliance

Tax reporting of international accounts and activities is complex, and failure to file foreign tax information forms may lead to potentially ruinous penalties. The IRS continues to focus its attention and resources on international tax compliance reporting.

The Internal Revenue Code sets penalties for failure to file Form 5471 at $10,000 per year per form, and the Form 5472 penalty has been increased to $25,000 per return per year. Those penalties can be increased for certain continuation failures up to $60,000 for Form 5471 and an infinite amount for Form 5472.

The penalties for failure to file the FBAR (FinCEN Form 114) range from $10,000 per year for non-willful failure to file up to the greater of $100,000 or 50 percent of the account balance at the time of the violation for willful noncompliance. Multiple penalties may be assessed annually based on the number of unreported foreign accounts.

Listen as our experienced panel provides best practices for documenting and filing requests to reduce foreign tax penalties.

1. Summary of most common international tax reporting forms
2. Penalty structure
3. What types of behavior result in determinations of willfulness?
4. IRS penalty avoidance programs, including the Criminal Investigation Division voluntary disclosure program
5. Reasonable cause abatement standards
6. IRS penalty abatement request process
7. Best practices in drafting penalty abatement requests
8. What happens when penalty relief fails?

The panel will review these and other key issues:

• What foreign reporting forms are subject to penalties, and how are the penalties calculated, including current litigation on this issue?
• What are the penalty structures for non-willful and willful failure to file? What standards are used by the IRS and the courts?
• What are the standards for "reasonable cause" relief?
• How can the IRS' streamlined procedures be used to mitigate various penalties?

Learning Objectives

After completing this course, you will be able to:

• Identify the penalty structures for failure to accurately and timely file required international tax information forms
• Recognize the IRS standards for reasonable cause relief requests and understand the IRS' decision-making process as found in the Internal Revenue Manual for evaluating reasonable cause statements
• Ascertain components of documenting a penalty abatement request that conforms with IRS requirements

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules for domestic and multinational businesses; supervisory authority over other preparers/accountants. Knowledge and understanding of foreign information filing requirements and penalties for non-compliance; familiarity with IRS processes for penalty abatement requests.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.