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April 3, 2023

Tax Court holds Code does not authorize IRS to assess penalties under IRC Section 6038(b)

In a T.C. Opinion (Alon Farhy v. Commissioner), the Tax Court has held that although the taxpayer had willfully failed to file Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations, for 2003—2010, the IRS lacked authority to assess penalties under IRC Section 6038(b), governing a US person's transfers to foreign entities, because "unlike a bevy of other penalty sections in the Code [this section] contains no provision authorizing assessment of the penalty it provides for."

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor


Farhy v. CIR