U.S. District Court Upholds IRS Authority to Assess Foreign Gift Penalty, Dismisses APA, Excessive Fines Claims

The U.S. District Court for the Northern District of California held that the IRS has statutory authority to assess penalties under IRC §6039F for failure to report foreign gifts and dismissed the taxpayer’s APA and Eighth Amendment claims. The taxpayer, a U.S. resident, received approximately $287,000 in wedding gifts from family in China in 2017 but failed to timely file Form 3520 as required to report foreign gifts exceeding statutory thresholds. After the IRS assessed a penalty, later partially reduced on administrative appeal, the taxpayer paid the penalty and filed a refund suit challenging the assessment. The court concluded that ...