April 3, 2023 (Washington D.C.)
In a decision that is sure to be challenged by the IRS, the United States Tax Court (Farhy v Commissioner, 160 TC No.6, 3 April 2023) ruled that “Congress has explicitly authorized assessment with respect to myriad penalty provisions in the Code, but not for [Form 5471 penalties].” The Tax Court distinguished a penalty that the IRS is authorized to issue and a penalty that has been properly assessed. This distinction, without a change in the law or a successful appeal of Farhy, may impact the IRS’ ability to collect the Form 5471 penalties that it imposes.
For the full copy of the Tax Court opinion, please go to Farhy v Commissioner 160 T.C. No. 6