Limitations on Assessment and Collection (Barred v. Not Barred)

ID:
Office:
UILC:
CCA_2010122014535444
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6501.00-00
Number: 201104041
Release Date: 1/28/2011
From: ---
Sent: Monday, December 20, 2010 2:54:02 PM
To: ---
Cc: ---
Subject: RE: 5471s
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Section 6501(c)(8), as amended by the Hiring Incentives to Restore Employment Act
(“HIRE”), Pub. L. 111-147 (124 Stat. 106), § 513, provides, in relevant part, that in the case of any information which is required to be reported to the Secretary under section 6038, the time for assessment of any tax imposed 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. The amendment applies to returns filed after March 18, 2010, or returns filed on or before that date if the section 6501 period (determined without regard to such amendments) for assessment of such taxes was not expired as of that date.
The HIRE Act amendment to section 6501(c)(8), therefore, clarifies that a failure to file
Form 5471 for a particular tax year would extend the time for the assessment of tax with respect to any tax return to which the information relates. The inclusion of “tax return” in section 6501(c)(8) means the extended period applies to an entire tax return and is not limited to adjustments to income related to the information required to be reported. See Technical Explanation of the Revenue Provisions Contained in Senate Amendment 3310, The “Hiring Incentive to Restore Employment Act,” Under Consideration in the Senate, JCX-4-10 (February 23, 2010). Assuming the section 6501 limitations period was open as of March 18, 2010, amended section 6501(c)(8) operates to extend the time for assessment of tax with respect to any tax return, including Forms 1040 and 1065, to which the information relates.
Please note that section 6501(c)(8) was further amended on August 10, 2010, to provide that if the failure to furnish the required information is due to reasonable cause and not willful neglect, the extended limitations period only applies to the item or items related to such failure and not the entire tax return. Pub. L. 111-226 (124 Stat. 2403), §
218. This provision is effective as if included in section 513 of the HIRE Act.
Depending on the facts, this could affect the taxpayer in your case.