Form 4564 – IRS Information Document Request (2019 Tax Trap Warnings)
If you’ve never experienced receiving an Information Document Request from the Internal Revenue Service, don’t worry — you’re not missing much.
As with most things in life that are bad, they come when you are least prepared, and not expecting it.
The same can be said about receiving an Information Document Request (IDR) from the Internal Revenue Service.
Information Document Request
When it comes to the Internal Revenue Service and “notices” they are keen to try to make everything as overreaching and intentionally ambiguous as possible — in order to overwhelm you.
An Information Document Request is no different. Technically, it is called a form 4564, which is utilized by the IRS in order to request certain documents from you.
If you are already under audit or examination, then gently within a few weeks if not simultaneously at the time you receive your notice of audit or examination, you will receive your first Information Document Request (IDR).
Depending on the nature of the audit or examination, the document request can be simple or exhaustive.
For example, if you are under a straightforward IRS audit for a particular deduction you may have taken or expense you claimed theInformation Document Request might be only 1-2 pages long, and relatively simple.
Alternatively, if you are a U.S. taxpayer with unreported/undisclosed foreign bank accounts, investments, trusts, business interests, etc. then the Information Document Request is generally going to be much more exhaustive.
On occasion, we have received IDRs that exceed 30-pages for a single audit/examination.
Increased Concern About International Tax Matters
The IRS is understaffed and under-budgeted. Therefore, they have to allocate their resources the best way they can. And, in recent years that means the IRS has increased focus and enforcement of international tax matters.
The penalties that the IRS can enforce for unreported accounts, assets, investments, or income are insane.
Foreign Account Penalty (Example)
For example, a person can be non-willful and simply have missed reporting some of their accounts and income, and the IRS can hit them with $12,000 + penalties, per account, per year.
In addition, if the IRS believes a person was willful, they can hit them with penalties upwards a 50 – 100% value of the foreign account-Along with tax fraud and other penalties – not the least being a the referral to the IRS Special agents for a criminal investigation
Even More Concern If You Receive a Lengthy International IDR
If you receive an information document request, you should always present the document to your CPA or Attorney (or retain one) before making any representation to the IRS.
More specifically, if you receive an information document request that is very lengthy and covers many different areas attacks, there are a few things to be aware of:
- What does the IRS already know?
- Have the foreign banks already reported your account(s)?
- Has somebody already blown the whistle on you?
- Does the IRS believe you acted fraudulently?
- Does the IRS believe you acted unlawfully?
- Is the IRS considering referring the matter for criminal investigation?
Beat the IRS to the Punch!
If you are out of compliance for not properly disclosing foreign income, accounts, assets, and/or investments — and are not under audit or examination — you may consider submitting to IRS Voluntary Disclosure (IRM, Streamlined or Reasonable Cause) in order to get into compliance.
We Specialize in Safely Disclosing Foreign Money
We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe.
Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 streamlined and voluntary disclosure submissions nationwide and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.
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Sean holds a Master's in Tax Law from one of the top Tax LL.M. programs in the country at the University of Denver. He has also earned the prestigious IRS Enrolled Agent credential. Mr. Golding's articles have been referenced in such publications as the Washington Post, Forbes, Nolo, and various Law Journals nationwide.