For the last several years, LB&I has maintained compliance campaigns to address and improve various areas of tax compliance. On April 16, 2019, LB&I announced the addition of three new compliance campaigns, two of which involve reporting issues: the Offshore Private Banking Campaign and the Loose Filed Forms 5471 Campaign.
Offshore Private Banking Campaign
The Offshore Private Banking Campaign is under the Withholding & International Individual Compliance practice area. The purpose of the campaign is to improve federal income tax and information reporting compliance associated with offshore activities, which includes issues such as FBAR compliance and Form 8938 (Statement of Specified Foreign Financial Assets) compliance. The campaign description states that the IRS has amassed records that identify taxpayers with transactions or accounts at offshore private banks, which likely has been compiled from sources such as reporting under Chapter 4. The IRS plans to initially address noncompliance through examinations and correspondence. Additional compliance techniques may be developed based on feedback received throughout the campaign.
The Loose Filed Forms 5471 Campaign
The Loose Filed Forms 5471 Campaign is also under the Withholding & International Individual Compliance practice area. The purpose of the campaign is to ensure that U.S. persons file Forms 5471 in the correct manner. In general, Forms 5471 (Information Return of U.S. Persons With Respect to Certain Foreign Corporations) must be filed by U.S. persons if they satisfy the criteria of any one of five categories of filers. The IRS has identified that some taxpayers incorrectly file Forms 5471 by sending the form to the IRS without attaching it to their federal income tax return. The taxpayers that have filed a loose Form 5471 should file an amended federal income tax return with their Form 5471 attached.