Skip to content

Campaign for Compliance

Last year the IRS announced a new campaign to target “Withholding and International Individual Compliance” regarding Forms 1042 and 1042-S. Those who make payments of certain U.S.-source income to foreign persons must comply with withholding, deposit, and reporting requirements. The IRS campaign promised to address “withholding agents who make such payments but do not meet all their compliance duties.”

In accordance with this promise, the IRS initiated the campaign, uncovering several thousand noncompliant withholding agents for the 2017 tax year alone. Letters addressing this noncompliance are now being sent to withholding agents on an “ongoing, rolling basis,” according to Kimberly Schoebacher, IRS Acting Director for Foreign Payments of the Large Business and International Division.

For those with tax withholding and Forms 1042 and 1042-S reporting requirements, now is the time to come forward and voluntarily disclose previous noncompliance to try to avoid penalties. Schoebacher stated that once a campaign letter is received, penalty abatement is unavailable.

Click here for the full GT Alert, which explores the procedures for disclosure, pitfalls for the unwary, and why the time is now to take advantage of the disclosure procedures to correct any noncompliance. 

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Michelle Ferreira Michelle Ferreira

G. Michelle Ferreira is Co-Managing Shareholder of the San Francisco Office and Co-Managing Shareholder of the Silicon Valley Office and counsels individuals, partnerships, estates and corporations in tax disputes with the Internal Revenue Service and state and local tax agencies, including the California

G. Michelle Ferreira is Co-Managing Shareholder of the San Francisco Office and Co-Managing Shareholder of the Silicon Valley Office and counsels individuals, partnerships, estates and corporations in tax disputes with the Internal Revenue Service and state and local tax agencies, including the California Franchise Tax Board, the State Board of Equalization, the Employment Development Department and county assessment appeals boards.

As a former tax litigator for the Internal Revenue Service, Michelle brings unique experience to clients who have complex and sensitive tax and penalty disputes. Michelle represents clients before the IRS, and state and local tax agencies at the audit, collection, appeals and litigation stages.

Michelle has 18 reported decisions in the U.S. Tax Court on issues such as unreported income, family limited partnerships, civil and criminal tax fraud, penalty assessments, statutes of limitation assertions, valuation disputes, controversies involving valuation discounts for lack of control and lack of marketability, tax shelters, hobby losses, complex real estate transactions, tax structured transactions, and unsubstantiated business expenses.

Photo of Jennifer A. Vincent Jennifer A. Vincent

Jennifer A. Vincent is an associate in the Audits, Litigation & Criminal Tax Defense Group, focusing on federal and state tax controversies and litigation. Ms. Vincent represents both individuals and companies in proceedings before the Internal Revenue Service and before California taxing authorities…

Jennifer A. Vincent is an associate in the Audits, Litigation & Criminal Tax Defense Group, focusing on federal and state tax controversies and litigation. Ms. Vincent represents both individuals and companies in proceedings before the Internal Revenue Service and before California taxing authorities, including the Franchise Tax Board and the California Department of Tax and Fee Administration. She also assists clients with compliance counseling for both federal and state-based tax issues.

Ms. Vincent has considerable experience in defending clients in federal offshore audits and income tax examinations and in California income, sales and use tax, and property tax matters.