Proportionality Key IRS Goal in New Rules on Gain Recognition Pacts

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The government was seeking “proportionality” in its new rules on gain recognition agreements but still expects taxpayers to make legitimate compliance efforts to get relief, Internal Revenue Service and Treasury officials said April 4.
The proposed rules (REG-140649-11) eliminate the need for taxpayers to prove reasonable cause in seeking relief from penalties and gain recognition after failure to fully or properly file a GRA. Instead, taxpayers must show that it was not a “willful failure”—what is considered an easier standard to meet than reasonable cause (21 DTR G-3, 1/31/13).
David Bailey, an attorney in Branch 4 of IRS's Office of Associate Chief Counsel (International), said the government was seeking “proportionality” in the proposed rules, which he said IRS hopes to finalize as soon as possible.


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