Yearly Archives: 2012

The development comes as taxpayers are focusing on the requirement to report those specified assets under new tax code Section 6038D. That code section was put in place by the Foreign Account Tax Compliance Act (FATCA), with reporting requirements going into effect in 2012.

Barbara Rasch, an attorney-adviser in Branch 2 in the IRS Office of Associate Chief Counsel (International), said IRS is actively working to revise the Form 8621, which taxpayers use to report their passive foreign investment company assets under tax code Section 1298. She noted that as taxpayers fill out the Form 8938, taxpayers need only indicate that they have reported their PFIC assets separately on the Form 8621, instead of detailing them on both forms.

Speaking at an international tax conference sponsored by the Practising Law Institute, Rasch also said IRS is actively working on guidance on PFIC reporting requirements under tax code Section 1298(f).

Code Sec. 6501(a) generally provides that a valid assessment of income tax liability may not be made more than three years after the later of the date the tax return was filed or the due date of the tax return. The three-year period is suspended during the period in which IRS is prohibited from making an assessment, and during the pendency of a Tax Court case “in respect of” the deficiency plus an additional 60 days. (Code Sec. 6503(a)(1)

In situations involving transferee liability, IRS has an additional year to assess the deficiency against a transferee of assets of the taxpayer-transferor. (Code Sec. 6901(c)(1))

The Tax Court concluded that the limitations period for assessment of transferee liability had expired. The Tax Court also found that the Wisconsin notice was invalid as to SCC because it wasn't sent to its last known address, and that the first petition wasn't “in respect of” SCC's deficiency under Code Sec. 6503(a)(1). Accordingly, the Tax Court held that the invalid notice didn't suspend the limitations period as to SCC, the first petition filed in response to the invalid notice didn't suspend the limitations period, IRS's assessment against SCC was untimely, and the notices of transferee liability were untimely.

The sole issue on appeal was whether the first petition was a “proceeding in respect of the deficiency” that suspended the limitations period under Code Sec. 6503(a)(1). The parties agreed that, if it was, the transferee liability notices were timely.

Looking at the plain language of Code Sec. 6503(a)(1), and bearing in mind that statutes of limitation barring tax collections or assessments by IRS are “strictly construed in the government's favor” (Atl. Land & Improvement Co. v. U.S., (CA 11 1986)), the Eleventh Circuit found that the first petition qualified as a proceeding sufficient to suspend the limitations period. Thus, the limitations period was suspended, and the transferee liability notices were timely issued.

Shockley V. Comm,(CA 11 7/11/2012)

The opinion points out that there is evidence supporting the conclusion that Williams' failure to file the FBAR was willful, particularly where a "willful violation" can include "willful blindness to the FBAR requirement" or "intentional ignorance." Maj. Op. at 12.

• "Thus, we are convinced that, at a minimum, Williams's undisputed actions establish reckless conduct, which satisfies the proof requirement under § 5314. Safeco Ins., 551 U.S. at 57. 
• Accordingly, we conclude that the district court clearly erred in finding that willfulness had not been established. For the foregoing reasons, we reverse the judgment of the district court and remand this case for proceedings consistent with this opinion."

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