When taxpayers miss tax-related deadlines, the IRS may show leniency if the causes of the delay are “reasonable.” A married couple living abroad admitted to filing and paying their U.S. taxes late, citing the birth of a child and the deaths of family members as reasonable causes. The IRS disagreed. In a U.S. Court of Federal Claims, those causes were found to make it difficult to meet their tax obligations, but not “virtually impossible” as claimed. Also, they didn’t seek help with their tax obligations until after the deadlines.
The IRS has added five new issues to its Large Business and International (LB&I) Division’s audit strategy. The new “campaigns” involve the individual foreign tax credit (phase 2, which addresses taxpayers who’ve claimed the credit but don’t meet the requirements); offshore service providers; Foreign Account Tax Compliance Act filing accuracy; 1120-F delinquent returns; and the Work Opportunity Tax Credit. The campaigns cover issues that present greater compliance risk.