Wednesday, October 14, 2020

IRS Sends Letter 6311 to Taxpayers Who Filed Form 5471 in 2017 - Can You Still Get Penalties Waived?

On July 30, 2020 we posted Last Call For Voluntary Disclosure For 2017 Unpaid Transition Tax! where we discussed that  Douglas O' Donald, Commissioner IRS Large Business and International division said on  during a webcast hosted by the American Bar Section of Taxation, that: 
The IRS Will Begin Distributing Letters and Placing People Into Its Audit Pipeline in "October" To Enforce The Transition Tax On Overseas Profits Included In The 2017 Tax Law!
The IRS expects to send thousands of letters to people who the agency expects may need to comply more fully with repatriation tax. Hundreds of others, who have flouted their related compliance responsibilities, will likely be placed into the agency's purview.
For Offshore Voluntary Disclosures, including Streamlined Offshore Voluntary Disclosures, if the IRS has initiated a civil examination of taxpayer's returns for any taxable year, regardless of whether the examination relates to undisclosed foreign financial assets, the taxpayer will not be eligible to use the Voluntary Disclosure Procedures. 
On September 18, 2020 the IRS actually sent Letter 6311 to taxpayers, who filed Form 5471 in 2017, notifying them that in addition to filing their form 5471, they may need to take the following actions:
  1. Include additional amounts in income,
  2. Pay additional tax if applicable, and
  3. Comply with additional information reporting obligations.
 Specifically, what the IRS is looking for is:
  • IRC §965 Transition Tax,
  • IRC §951A GILTI Tax,
  • IRC §250 50% Deduction for Corporate Taxpayer's, 
  • IRC §960 80% Deamed Paid Foreign Tax Credit and
  • IRC §962  Election to be taxed as a Corporation.
The  Letter 6311 Then Goes On To State
"When Filing An Amended Return, Wright "Letter 6311"
At The Top Of The First Page Of The Return" - WHY?
While this is similar to other favorable IRS disclosure programs, requiring you to write the name of the program of the top of the return, there is no waiver penalties for late payment of tax and interest which already apply to this amended tax return, filed 2 years after its original due date, which now includes additional tax liability for the Transition Tax and GILTI Tax.
Have a 2017 TCJA International Tax Problem?

Want to Know if the OVDP Program is Right for You? 

Contact the Tax Lawyers at 
Marini & Associates, P.A.   

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