Kostelanetz partner Michael Sardar was quoted in Tax Notes regarding proposed changes by the IRS concerning taxpayers burdened with penalties stemming for late-filed foreign trust and gift reports (Forms 3520 and 3520-A).
The Tax Notes article covered an October 31 panel at the Procopio International Tax Institute conference in San Diego, in which Michael Sardar participated. During the panel, Lara Banjanin of the IRS Office of Associate Chief Counsel (International) addressed the IRS’s recent announcement that it would stop assessing penalties for late-filed Form 3520, part 4, for U.S. recipients of foreign gifts or bequests and also begin reviewing reasonable cause statements that are attached to late-filed Form 3520, “Annual Return to Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts,” and Form 3520-A, “Annual Information Return of Foreign Trust With a U.S. Owner.”
Michael, noted that the change in approach with respect to the penalties was significant, because IRS agents were not routinely reviewing reasonable cause statements prior to imposing penalties, forcing taxpayers to challenge late penalties and undergo a lengthy appeals process.
“This was frustrating to taxpayers and to their representatives, because lots of wasted time and resources were going into challenging things on the back end — after a penalty had been imposed — that we thought, had people read this statement, perhaps it wouldn’t have been imposed in the first place,” Michael is quoted in the article as saying. He added that in some cases, the IRS had already started collection activity against the taxpayer because of the penalty being imposed.
Tax Notes subscribers can read the full article here.
Michael represents clients in all stages of civil and criminal tax controversies before the Internal Revenue Service (IRS), state tax authorities, the Department of Justice, and local prosecutors. He has also represented scores of clients with unreported foreign assets, enabling the repatriation of over half a billion dollars of offshore assets through the IRS Offshore Voluntary Disclosure Program, the Streamlined Compliance Procedures, and the IRS’ current Voluntary Disclosure Practice.
For more than 75 years, Kostelanetz LLP has built a global reputation as a law firm of choice for clients facing high-stakes controversies and negotiations with government agencies. Our attorneys have extensive experience in tax controversy, tax fraud, government investigations, and white-collar criminal defense and are regularly called upon to handle the most challenging and sensitive cases and internal investigations. Important parts of the firm’s practice include tax and estate planning, commercial litigation, and government procurement and contracting. To learn more or to contact a Kostelanetz attorney, explore Our People and Practice Areas.
