U.S. taxpayers that own or control certain foreign corporations, foreign partnerships or foreign trusts are required to disclose the activities, usually with forms attached to a tax return. If not reported timely or properly on the designated forms, these U.S. taxpayers may be subject to significant penalties. A recent Tax Court Ruling for Farhy v. Commissioner brought to light how the Internal Revenue Service (IRS) applies these penalties. The main issue argued whether the law actually grants the IRS the authority to assess and collect these penalties. 

Listen as Brooks Nelson, Partner and Strategic Tax Leader, and Sarah McGregor, Tax Director, are joined by Brian Dill, International Tax Leader, as they discuss:

• 2:28 – Background Farhy v. Comm and Similar Taxpayer Challenges
• 6:30 – Tax Court Ruling in Farhy Case
• 8:55 – Penalties Impact from Ruling
• 10:24 – Government Penalty Collection
• 11:07 – Demand for Clear Statue of Limitations
• 18:01 – Other Important Tax Court Rulings
• 20:05 – Recommendations to Organizations with International Assets and Operations

Other Related Guidance

• Supreme Court Issues Opinion in Bittner v. United States (FBAR Case)
• Importance of R&D Tax Credit Documentation: Lessons from Recent Court Cases