Newly enacted H.R. 1586 modifies limitation period in HIRE Act

Section 6501(c)(8) provides an exception to the normal three-year period of limitations for assessments if the taxpayer fails to provide complete foreign transaction reporting as specified in that provision. HIRE Act, which was enacted on March 18, 2010, added additional foreign information items that will extend the assessment period and provided that only the extended limitation period applies to the entire return rather than to the item or items related to the information failure.
    
Recently enacted H.R. 1586 modifies this provision and includes a technical correction to the HIRE Act.  Accordingly, the expanded period of limitations for assessments under section 6501(c)(8) applies to the entire tax return unless the reporting failure is due to reasonable cause and not willful neglect.  If the taxpayer has reasonable cause, the expanded period of limitations for assessment applies only to the item or items related to the failure. This certainly is a welcome news.

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