1. J. Edgar Murdoch Inn of Court Tax Statutes of Limitations: International Emphasis April 14, 2015 Judge BuchDrita TonuziGlenn Melcher Thomas SawyerNancy KuhnSaul Mezei Emin ToroJake GagnonCharles Buxbaum Richard GoldsteinNancy KnappStarling Marshall Susan SeabrookTodd SimmensBrendan O’dell

2. International Issues Scene 1: Gathering Evidence IRC § 982 John Doe summons Suspension of criminal statute during treaty request Scene 2: Foreign Information Returns HIRE Act Form 1120-F Denial of any deductions if no return filed in 18 mos. Non-resident aliens: Denial of deductions if no return filed in 16 mos. Form 5471 Failure to report Scene 3: Foreign Reporting and Bank Account FBAR Form 8938 Previous Presentations (Civil) General rule: IRS has 3 years from the date a tax return is filed to assess additional tax. IRC § 6501(a) 6 years - substantial omission of gross income - § 6501(e)(1)(A)(i) Unlimited – false or fraudulent return - § 6501(c)(2) Extension by agreement - § 6501(c)(4) Collection: IRS may collect for 10 years after assessment. IRC § 6502. 10-year period suspended for time taxpayer is outside of the United States if absent for continuous period of at least 6 months. IRC § 6503(c)

3. Previous presentations (criminal) Description of OffenseCode SectionStatute of LimitationsCode Section Tax Evasion26 U.S.C. § 72016 years26 U.S.C. § 6531(2) Failure to Collect, Account For or Pay Over 26 U.S.C. § 72026 years26 U.S.C. § 6531(4) Failure to Pay Tax26 U.S.C. § 72036 years26 U.S.C. § 6531(4) Failure to File a Return26 U.S.C. § 72036 years26 U.S.C. § 6531(4) Failure to Keep Records26 U.S.C. § 72033 years26 U.S.C. § 6531 Failure to Supply Information 26 U.S.C. § 72033 years26 U.S.C. § 6531 Supplying False Withholding Exemption Certificate 26 U.S.C. § 72053 years26 U.S.C. § 6531 Filing a False Tax Return26 U.S.C. § 7206(1)6 years26 U.S.C. § 6531(5) Aid or Assist in Preparation or Presentation of False Tax Return 26 U.S.C. § 7206(2)6 years26 U.S.C. § 6531(3) Deliver or Disclose False Document 26 U.S.C. § 72076 years26 U.S.C. § 6531(5) Attempt to Interfere With Administration of Internal Revenue Laws 26 U.S.C. § 7212(a)6 years26 U.S.C. § 6531(6) Conspiracy to Commit Tax Evasion 18 U.S.C. § 3716 years26 U.S.C. § 6531(8) Conspiracy to Defraud the Internal Revenue Service 18 U.S.C. § 3716 years26 U.S.C. § 6531(1) False Claim for Refund18 U.S.C. § 286/2876 years26 U.S.C. § 6531(1) False Statement18 U.S.C. § 10015 years18 U.S.C. § 3282

4. Gathering Evidence: Foreign Based evidence – IRC § 982 (a) General rule - If the taxpayer fails to substantially comply with any formal document request arising out of the examination of the tax treatment of any item (hereinafter in this section referred to as the ‘‘examined item’’) before the 90th day after the date of the mailing of such request on motion by the Secretary, any court having jurisdiction of a civil proceeding in which the tax treatment of the examined item is an issue shall prohibit the introduction by the taxpayer of any foreign-based documentation covered by such request. (b) Reasonable cause exception (1) In general. Subsection (a) shall not apply with respect to any documentation if the taxpayer establishes that the failure to provide the documentation as requested by the Secretary is due to reasonable cause. (2) Foreign nondisclosure law not reasonable cause - For purposes of paragraph (1), the fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the requested documentation is not reasonable cause. (c) Formal document request. For purposes of this section— (1) Formal document request The term ‘‘formal document request’’ means any request (made after the normal request procedures have failed to produce the requested documentation) for the production of foreign-based documentation which is mailed by registered or certified mail to the taxpayer at his last known address and which sets forth—(A) the time and place for the production of the documentation, (B) a statement of the reason the documentation previously produced (if any) is not sufficient, (C) a description of the documentation being sought, and (D) the consequences to the taxpayer of the failure to produce the documentation described in subparagraph (C). (2) Proceeding to quash (A) In general Notwithstanding any other law or rule of law, any person to whom a formal document request is mailed shall have the right to begin a proceeding to quash such request not later than the 90th day after the day such request was mailed. In any such proceeding, the Secretary may seek to compel compliance with such request. (B) Jurisdiction The United States district court for the district in which the person (to whom the formal document request is mailed) resides or is found shall have jurisdiction to hear any proceeding brought under subparagraph (A). An order denying the petition shall be deemed a final order which may be appealed. (C) Suspension of 90-day period The running of the 90-day period referred to in subsection (a) shall be suspended during any period during which a proceeding brought under subparagraph (A) is pending. (d) Definitions and special rules For purposes of this Section— (1) Foreign-based documentation The term ‘‘foreign-based documentation’’ means any documentation which is outside the United States and which may be relevant or material to the tax treatment of the examined item. * * * (e) Suspension of statute of limitations. If any person takes any action as provided in subsection (c)(2), the running of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which the proceeding under such subsection, and appeals therein, are pending.

5. Gathering Evidence: Suspension of limitations to permit United States to obtain foreign evidence 18 USC § 3292 (a)(1) Upon application of the United States, filed before return of an indictment, indicating that evidence of an offense is in a foreign country, the district court before which a grand jury is impaneled to investigate the offense shall suspend the running of the statute of limitations for the offense if the court finds by a preponderance of the evidence that an official request has been made for such evidence and that it reasonably appears, or reasonably appeared at the time the request was made, that such evidence is, or was, in such foreign country. (2) The court shall rule upon such application not later than thirty days after the filing of the application. (b) Except as provided in subsection (c) of this section, a period of suspension under this section shall begin on the date on which the official request is made and end on the date on which the foreign court or authority takes final action on the request. (c) The total of all periods of suspension under this section with respect to an offense— (1) shall not exceed three years; and (2) shall not extend a period within which a criminal case must be initiated for more than six months if all foreign authorities take final action before such period would expire without regard to this section (d) As used in this section, the term ‘‘official request’’ means a letter rogatory, a request under a treaty or convention, or any other request for evidence made by a court of the United States or an authority of the United States having criminal law enforcement responsibility, to a court or other authority of a foreign country.

6. Gathering Evidence: Special procedures for third- party summonses. IRC § 7609 (e) Suspension of statute of limitations (1) Subsection (b) action If any person takes any action as provided in subsection (b) and such person is the person with respect to whose liability the summons is issued (or is the agent, nominee, or other person acting under the direction or control of such person), then the running of any period of limitations under section 6501 (relating to the assessment and collection of tax) or under section 6531 (relating to criminal prosecutions) with respect to such person shall be suspended for the period during which a proceeding, and appeals therein, with respect to the enforcement of such summons is pending. (2) Suspension after 6 months of service of Summons In the absence of the resolution of the summoned party’s response to the summons, the running of any period of limitations under section 6501 or under section 6531 with respect to any person with respect to whose liability the summons is issued (other than a person taking action as provided in subsection (b)) shall be suspended for the period— (A) beginning on the date which is 6 months after the service of such summons, and (B) ending with the final resolution of such response. (f) Additional requirement in the case of a John Doe summons Any summons described in subsection (c)(1) which does not identify the person with respect to whose liability the summons is issued may be served only after a court proceeding in which the Secretary establishes that— (1) the summons relates to the investigation of a particular person or ascertainable group or class of persons, (2) there is a reasonable basis for believing that such person or group or class of persons may fail or may have failed to comply with any provision of any internal revenue law, and (3) the information sought to be obtained from the examination of the records or testimony (and the identity of the person or persons with respect to whose liability the summons is issued) is not readily available from other sources.

7. International-related Information returns and forms (and The HIRE Act) IRC § 6501(c)(8) Failure to notify Secretary of certain foreign transfers (A) In general In the case of any information which is required to be reported to the Secretary pursuant to an election under section 1295(b) or under section 1298(f), 6038, 6038A, 6038B, 6038D, 6046, 6046A, or 6048, the time for assessment of any tax imposed by this title with respect to any tax return, event, or period to which such information relates shall not expire before the date which is 3 years after the date on which the Secretary is furnished the information required to be reported under such section. (B) Application to failures due to reasonable cause. If the failure to furnish the information referred to in subparagraph (A) is due to reasonable cause and not willful neglect, subparagraph (A) shall apply only to the item or items related to such failure. IRC § 6501(e)(1)(A)(ii) - 6 year limitations period (e) Substantial omission of items Except as otherwise provided in subsection (c)— (1) Income taxes In the case of any tax imposed by subtitle A— (A) General rule If the taxpayer omits from gross income an amount properly includible therein and— (i) such amount is in excess of 25 percent of the amount of gross income stated in the return, or (ii) such amount—(I) is attributable to one or more assets with respect to which information is required to be reported under section 6038D (or would be so required if such section were applied without regard to the dollar threshold specified in subsection (a) thereof and without regard to any exceptions provided pursuant to subsection (h)(1) thereof), and (II) is in excess of $5,000, the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time within 6 years after the return was filed.

8. Failure to file international return IRC § 882 [Corporations] (a)(1) In general. A foreign corporation engaged in trade or business within the United States during the taxable year shall be taxable as provided in section 11, 55, 59A, or 1201(a) on its taxable income which is effectively connected with the conduct of a trade or business within the United States. (c)(2) Deductions and credits allowed only if return Filed. A foreign corporation shall receive the benefit of the deductions and credits allowed to it in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F, including therein all the information which the Secretary may deem necessary for the calculation of such deductions and credits. … 18 month rule (Treas. Reg. 882-4(a)(3) (“As provided in paragraph (a)(2) of this section, for purposes of computing the foreign corporation’s taxable income for any taxable year, otherwise allowable deductions … and credits … will be allowed only if a return for that taxable year is filed by the foreign corporation on a timely basis. … [T]he required return for the current taxable year must be filed within 18 months of the due date….”) IRC § 874 [non-resident aliens] (a) Return prerequisite to allowance - A nonresident alien individual shall receive the benefit of the deductions and credits allowed to him in this subtitle only by filing or causing to be filed with the Secretary a true and accurate return, in the manner prescribed in subtitle F … including therein all the information which the Secretary may deem necessary for the calculation of such deductions and credits.… 16 month rule (Treas. Reg. 1.874-1(b) (“As provided in paragraph (a) of this section, for purposes of computing the nonresident alien individual’s taxable income for any taxable year, otherwise allowable deductions and credits will be allowed only if a true and accurate return for that taxable year is filed by the nonresident alien individual on a timely basis. *** [T]he required return for the current taxable year must be filed within 16 months of the due date, as set forth in section 6072 and the regulations under that section, for filing the return for the current taxable year. ”)

9. International Reporting Forms implicated by Hire Act IRS FormDescriptionCode Section 5471US persons who control foreign corporations or who become officers or directors of foreign corporation 26 U.S.C. § 6038 & 6046 8865US persons who control foreign partnerships26 U.S.C. § 6046A 8858Foreign single member disregarded entitiesNo statutory authority 5472US corporations with 25% foreign shareholder26 U.S.C. § 6038A 8865Transfers to foreign persons26 U.S.C. § 6038B 926Nonrecognition transfers to foreign corporations26 U.S.C. § 6038B 5471Organizations, reorganizations, and acquisitions of stock of foreign corporations 26 U.S.C. § 6046 3520Transfers to foreign trusts26 U.S.C. § 6048 8621Shareholder of PFIC26 U.S.C. § 1295 & 1298(f) 3520-ADistributions received by US person from foreign trusts26 U.S.C. § 6048(c)

10. FBARs Assessing FBARs - 31 USC 5321(b) (b) TIME LIMITATIONS FOR ASSESSMENTS AND COMMENCEMENT OF CIVIL ACTIONS.— (1) ASSESSMENTS.—The Secretary of the Treasury may assess a civil penalty under subsection (a) at any time before the end of the 6- year period beginning on the date of the transaction with respect to which the penalty is assessed. (2) CIVIL ACTIONS.—The Secretary may commence a civil action to recover a civil penalty assessed under subsection (a) at any time before the end of the 2-year period beginning on the later of— (A) the date the penalty was assessed; or (B) the date any judgment becomes final in any criminal action under section 5322 in connection with the same transaction with respect to which the penalty is assessed. Collecting FBARs – 31 USC 3716 Administrative Offset (a) After trying to collect a claim from a person under section 3711(a) of this title, the head of an executive, judicial, or legislative agency may collect the claim by administrative offset…. (e)(1) Notwithstanding any other provision of law, regulation, or administrative limitation, no limitation on the period within which an offset may be initiated or taken pursuant to this section shall be effective.