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Foreign Information Return Penalties After Farhy: Case Review and Updates, Penalty Abatements, Refund Claims

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, June 27, 2023

Recorded event now available

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This webinar will review the decision in Farhy v. Commissioner and detail the actions international tax practitioners need to take in light of this case. Our panel of prestigious tax attorneys, from the firm that represented Farhy, will explain how this decision impacts foreign information return reporting, including penalties assessed in the past, and steps practitioners should take to preserve the benefits of this taxpayer-favorable ruling for their international clients.


The Supreme Court, in Bittner v. United States, limited the imposition of FBAR filing penalties to a single penalty per form rather than penalizing the taxpayer for each foreign account, astronomically reducing the amount the IRS can assess taxpayers for improperly filing these information returns. This decision, and the more recent outcome in Farhy v. Commissioner, stand in stark contrast to the many cases over the years imposing astounding penalties for non and late filing of foreign information returns.

In Farhy v. Commissioner 160 T.C. No. 6 (T.C. Apr. 3, 2023), the Tax Court ruled that the IRS did not have the authority to assess and collect penalties under IRC Section 6038(b) for failure to file Forms 5471. The IRS will likely appeal the Farhy decision but now would need to file a civil action to collect these penalties. In the interim, international tax advisers must reassess the status of late and non-filed foreign information reports. The ramifications of this ruling could apply to other forms, including Forms 5472, 8858, 8938, 926, and perhaps even the 3520.

For tax practitioners bombarded with multiple penalties in increments of, and no less than, $10,000 each for multiple clients, the Farhy decision offers the opportunity for substantial refunds of erroneously assessed penalties. It also opens the door to a multitude of questions on eligibility and applying for relief.

Listen as our panel from Hochman Salkin Toscher & Perez, P.C., the firm that won this landmark case, reviews Farhy v. Commissioner and offers advice pertaining to refund claims for wrongful assessment of foreign reporting penalties.



  1. Foreign return penalties: introduction
  2. Farhy v. Commissioner
  3. Impact on other foreign information reporting returns
  4. Penalty abatement
  5. Refund claims
  6. Best practices


The panel will cover these and other critical issues:

  • How does the Farhy decision affect current and past late-filed foreign information returns?
  • How many past years could possibly be eligible for refunds?
  • What is the current status of Fahry v. Commissioner?
  • Which clients are eligible for refunds or abatement of previously assessed penalties?
  • What steps should tax advisers take to ensure clients receive refunds for previously filed returns?
  • How can practitioners ensure clients are not assessed penalties for current and late filed Forms 5471?


Horwitz, Robert
Robert Horwitz

Hochman Salkin Toscher Perez

Mr. Horwitz has over 35 years of experience as a tax attorney specializing in the representation of clients in civil...  |  Read More

Robbins, Jr., Edward M.
Edward M. Robbins, Jr.

Hochman Salkin Toscher Perez

Mr. Robbins has considerable experience handling sensitive issue civil examinations and administrative appeals, civil...  |  Read More

Stein, Michel
Michel R. Stein

Hochman Salkin Toscher Perez

Mr. Stein specializes in tax controversies, as well as tax planning for individuals, businesses and corporations. For...  |  Read More

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