Foreign Wedding Gift Recipient Challenges Disclosure Tax Penalty

The IRS should refund a penalty it imposed for a taxpayer’s belated disclosure of $287,100 in wedding gifts from her family in China because the agency lacks authority to automatically assess the penalty at issue, her lawsuit said.

Jinming Zhang sued the IRS for a $68,000 refund on Wednesday, accusing the agency of exceeding its legal authority by collecting an IRC Section 6039F(c) penalty without bringing a civil suit for the amount. The statute requires US donees of large foreign gifts to file information returns or face a penalty.

According to Zhang’s complaint, the IRS’s authority to assess and collect ...