Tax News

CCH (cch.taxgroup.com) reports:

The IRS has issued final regulations regarding the information returns required under Code Secs. 6038 and 6038A
for certain related-party transactions of certain foreign corporations and certain foreign-owned domestic corporations. The new regulations adopt without change proposals issued on June 21, 2006 (NPRM REG-109512-05) and remove the temporary regulations issued at the same time (T.D. 9268, IRB 2006-30, 94). The final regulations are effective on July 13, 2007.
The final regulations expand the reporting requirements to include transactions between a foreign corporation and controlled partnerships. In addition, the final regulations now require the reporting of sales and purchases, rather than just purchases, of tangible property and to include the reporting of premiums paid, rather than just premiums received, for insurance or reinsurance (Reg. §1.6038-2(f)(11)). The final regulations also clarify that foreign corporations that use an accrual method of accounting must report the transactions described in Reg. §1.6038-2(f)(11) on an accrual basis.
Finally, the regulations have been updated to reflect changes to Code Sec. 6038(b), made by the Taxpayer Relief Act of 1997 (P.L. 105-34). Code Sec. 6038(b) imposes a $10,000 penalty for failure to furnish the required information returns within the time proscribed and provides for additional penalties when there is a continuing failure to file the required information returns. However, Code Sec. 6038(c)(4)( and Reg. §1.6038-2(k)(3) provide a reasonable cause exception for failure to furnish the required information.
T.D. 9338, 2007FED ¶47,045
Other References:
Code Sec. 6038
CCH Reference - 2007FED ¶35,543
CCH Reference - 2007FED ¶35,543B
CCH Reference - 2007FED ¶35,561B
Tax Research Consultant
CCH Reference - TRC FILEBUS: 9,100
CCH Reference - TRC IRS: 66,156