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Letter For The Tax Notice

Decent Essays

This letter is in response to the tax notice dated October 5, 2015, (copy enclosed) for the $20,000 penalty assessment under IRC Section 6038A(d)(1) for failure to timely provide complete information on Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business for the period ended December 31, 2014. A copy of the executed Power of Attorney is enclosed.

We respectfully request abatement of the $20,000 penalty because the failure to file timely was due to reasonable cause under Reg. Sec. 1.6038A-4(b) and not willful neglect. Specifically, this abatement is requested pursuant to Treasury Regulation Section 1.6038A-4(b), relating to the affirmative showing of reasonable cause.

FACTS

• The 2014 Form 5472s were inadvertently filed late due to an honest misunderstanding. Zenstar (US), Inc. was formed on September 12, 2014. However, the corporation had no business transaction during 2014, and the ownership of the corporation has not been properly determined at the time of formation. Therefore, Form 7004 Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, was not filed on behalf of the Taxpayer for the calendar year 2014, because we believe there was no filing requirements for the Form 1120 and Form 5472 prior to the due date of the returns, March 15, 2015.

• In August 2015, the Taxpayer finalized its ownership structure when the foreign

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