Delinquent International Information Return Submission Lawyer

U.S. taxpayers with interests in foreign corporations, foreign trusts, foreign partnerships, foreign disregarded entities, or foreign financial assets are often required to file international information returns with the IRS — and many are unaware of these obligations until it is too late. The forms involved include Form 5471 (foreign corporations), Form 3520 and Form 3520-A (foreign trusts and foreign gifts), Form 8865 (foreign partnerships), Form 8858 (foreign disregarded entities), Form 8938 (foreign financial assets), Form 926 (transfers of property to foreign corporations), and Form 5472 (foreign-owned U.S. corporations). The penalties for failing to file these returns can be staggering, often reaching $10,000 or more per form, per year — and in many cases the IRS assesses these penalties automatically, even when the taxpayer had no idea a filing obligation existed. For taxpayers who have discovered they have unfiled international information returns, the IRS offers the Delinquent International Information Return Submission Procedures (DIIRSP) as a way to come into compliance and potentially avoid penalties entirely.

Under the DIIRSP, taxpayers who have reasonable cause for their failure to timely file may submit their delinquent international information returns without penalties, provided the IRS accepts the reasonable cause explanation. Eligibility requires that the taxpayer is not currently under civil examination or criminal investigation by the IRS and has not already been contacted about the delinquent returns. Each submission must include a detailed statement of facts, made under the penalties of perjury, describing the circumstances that establish reasonable cause and certifying that the entity for which the returns are being filed was not engaged in tax evasion. Reasonable cause is not defined in the tax code — it has been developed through case law and generally requires the taxpayer to demonstrate that they exercised ordinary business care and prudence but nevertheless failed to comply. Because the determination is highly fact-specific, a poorly drafted or unsupported reasonable cause statement can result in the IRS rejecting the submission and assessing substantial penalties.

Patel Law Offices has extensive experience guiding clients through the DIIRSP process and other international compliance procedures. Led by Mr. Patel — a Board Certified Tax Law Attorney and graduate of Georgetown (J.D.) and New York University (LL.M. in Tax) — our legal team has counseled over 1,000 clients in voluntary disclosure and international compliance matters. We carefully evaluate each client’s facts and circumstances to determine whether DIIRSP, the Streamlined procedures, or another compliance pathway is the most appropriate solution, and we prepare persuasive reasonable cause statements designed to achieve the best possible outcome. If you have unfiled international information returns and are concerned about potential penalties, contact Patel Law Offices to schedule a strategy session.