IRS Chief Counsel Clarifies “Liberal” Reasonable Cause Relief for Small Corporations Under §6038A

The IRS Office of Chief Counsel addressed when a corporation qualifies for liberal application of reasonable cause relief from penalties under I.R.C. §6038A for failure to file Form 5472. Small corporations with gross receipts of $20 million or less may qualify if they satisfy four prerequisites, including lack of knowledge of the §6038A requirements, limited U.S. presence and contact, and prompt compliance with IRS requests for required filings and related documentation. Chief Counsel explained that “liberal” application requires the IRS to be more generous and less strict in evaluating reasonable cause requests from qualifying small corporations but does not eliminate ...