DC Circuit: Tax Court was Wrong; IRS has the Authority To Assess Form 5471 Penalties
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DC Circuit: Tax Court was Wrong; IRS has the Authority To Assess Form 5471 Penalties

ByJustin Hughes - JD, CPA, LLM

Summary On Friday, May 3, 2024, the U.S. Circuit Court for the D.C. Circuit overturned the Tax Court’s decision in Farhy v. Commissioner, ___ F.4th ___ (D.C. Cir. 5/3/24) (link to opinion) and held that the IRS has authority under § 6038(b) to assess Form 5471 penalties.   The Tax Court previously held that the…

Tax Court Rejects Taxpayer’s Reasonable Cause Argument Regarding Automatic Penalties from Failure to File Forms 5471
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Tax Court Rejects Taxpayer’s Reasonable Cause Argument Regarding Automatic Penalties from Failure to File Forms 5471

ByJustin Hughes - JD, CPA, LLM

Flume v. Commissioner (here) revolved around one noteworthy issue: did the taxpayer’s reliance on the advice of his tax return preparer spare the taxpayer from $110,000 in penalties for the taxpayer’s failure to report foreign investments on Form 5471? The taxpayer argued that he relied on the expertise of his tax return preparer to guide…