A foreign corporation is required to file Form 1120-F if it is engaged in a U.S. trade or business. The Form 1120-F must be filed at the location designated in the instructions to Form 1120-F (U.S. Income Tax Return of a Foreign Corporation), whether or not the return is timely filed for purposes of Treas. Reg. 1.882-4(a)(3).

In general, if the foreign corporation fails to file Form 1120-F before the earlier of the date of notification by the IRS that a return is due or 18 months after the due date under IRC 6072, it is not entitled to deductions and credits under IRC 882(c)(2) and the regulations thereunder, and will instead be subject to tax under IRC 11 on its gross income at the rate provided for the applicable tax year.

Treas. Reg. 1.882-4(a)(3)(ii) permits the Commissioner to waive the filing deadline, and thus allow the foreign corporation to claim deductions and credits, if the foreign corporation can establish, based on the facts and circumstances, that it acted reasonably and in good faith in failing to timely file a return.

No one involved in a compliance function should accept as filed a delinquent return from a taxpayer (except as provided in the IRM) or discuss in advance of filing a return whether a waiver will be granted.

Once a return is filed, and the return is selected for examination, the guidelines in this IRM shall apply.

Unless otherwise noted, any reference to a Form 1120-F in this IRM includes a protective Form 1120-F as described in Treas. Reg. 1.882-4(a)(3)(iv).

All waiver requests are granted or denied by the authority of the Deputy Commissioner, LB&I under Treas. Reg. 1.882-4(a)(3)(ii) pursuant to LB&I DO 1-23-12.

Without prejudice to prior determinations, the Deputy Commissioner has delegated this authority to the Directors of Field Operations (DFO), Cross Border Activities (CBA).

Accordingly, the procedures below set forth the manner in which waiver requests will be elevated to the DFO for a final determination.

No one involved in a compliance function should accept as filed a delinquent Form 1120-F (see exception below) from a taxpayer or discuss in advance of filing a return whether a waiver will be granted.

If a taxpayer or a taxpayer’s representative submits a delinquent Form 1120-F or discusses the likelihood of a waiver being granted from the filing deadlines for the delinquent Form 1120-F, the examination team should inform the taxpayer (or its representative) that the Form 1120-F, even though delinquent under Treas. Reg. 1.882-4(a)(3)(i), must be filed in accordance with the filing instructions for the Form 1120-F.

Once a return is filed, and selected for examination, the examination team will develop any requests for waiver in accordance with the waiver request guidelines.

If the taxpayer did not submit a request for waiver for the tax return selected for examination, the examination team should make the taxpayer aware in writing of the option to request a waiver under Treas. Reg. 1.882-4(3)(ii) but shall not advise, instruct or otherwise signal the taxpayer to take any particular action. See Exhibit 4.61.14-4, Wording to Use With Waiver Procedure Information Letter.

The CBA Practice Area program manager will conduct ad hoc Waiver Procedures program reviews as necessary to verify compliance with IRM requirements, address Treasury Inspector General for Tax Administration (TIGTA) and/or Government Accountability Office (GAO) findings and provide support for any trends that appear.

Case reviews are conducted by the territory manager and the team manager to ensure compliance with this IRM.

The CBA DFO determines whether to grant or deny the request for waiver based only on the waiver request package and recommendations from the Waiver Committee.

An independent Waiver Committee will be selected to ensure that, regardless of the type of business conducted, all recommendations for denial of waivers will be evaluated and handled consistently.

The Waiver Committee will be comprised of the CBA Practice Area program manager, CBA territory manager, CBA team manager, and a member of the Treaty Assistance and Interpretation Team (TAIT) (if the foreign corporation is a resident of a treaty jurisdiction).

The CBA territory manager and CBA team manager will be designated by the DFO as part of the Waiver Committee and will not be the same CBA territory or team manager that reviewed the waiver request package.

The following table contains commonly used acronyms.

See the following IRM resources:

Web resources include the following:

The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

IRC 6072 provides the due dates for foreign corporations required to file an income tax return (Form 1120-F). The due date depends on whether the foreign corporation has an office or place of business in the United States. If it does have such an office or place of business, the return is due at the same time as a return of a domestic corporation. Note that those due dates changed for tax years beginning on or after January 1, 2016. If it does not have such an office or place of business, the return is due on or before the 15th day of the 6th month after the close of its taxable or fiscal year.

Under Treas. Reg. 1.6012-2(g) (1) a foreign corporation is required to file a tax return if it is engaged in a U.S. trade or business, even if it has no ECI or its income is exempt from tax under a tax treaty. However, if the foreign corporation has no gross income for the taxable year, it is not required to complete the return schedules, but must attach a statement indicating the nature of any exclusions claimed and the amount of the exclusions, to the extent such amounts are readily determinable.

Form 1120-F returns should be filed in accordance with the Form 1120-F filing instructions. Currently, Form 1120-F returns are filed with the Internal Revenue Service Center in Ogden, UT. Taxpayers may also be able to file Form 1120-F returns electronically. Prior to 2006, Form 1120-F returns were filed with the Internal Revenue Service Center in Philadelphia, PA.

The table below provides an illustrative example of the filing deadlines as described above (under IRC 6072 and Treas. Reg. 1.884-4) based on whether the corporation maintains an office or fixed place of business in the United States and its tax year end.

Treas. Reg. 1.882-4(a)(3)(i) prevents a foreign corporation from receiving the benefit of deductions and credits otherwise allowable (with the exceptions for deductions and credits noted in the statute) if it fails to meet the following special filing dates, as applicable, set forth in the regulations:

Under Treas. Reg. § 1.882-4(a)(3)(vi), a foreign corporation that conducts limited activities in the United States that it determines do not give rise to ECI may nonetheless file a return for the taxable year on a timely basis under Treas. Reg. 1.882-4(a)(3)(i) to protect its right to receive the benefit of deductions and credits if it is later determined, after the return is filed, that the determination is incorrect. The return does not need to report any gross income as ECI or any deductions or credits but should include a statement that the return is being filed to protect the foreign corporation’s right to deductions and credits. A foreign corporation may follow the same procedure if it determines initially that it has no U.S. tax liability under the provisions of an applicable income tax treaty. If it is claiming it does not have a permanent establishment in the United States, it must also generally disclose that position on Form 8833. Failure to attach a Form 8833 to a Form 1120-F results in a penalty annually of $10,000. See section 6712.

Under Treas. Reg. 1.882-4(a)(3)(ii), the filing deadlines set forth in Treas. Reg. 1.882-4(a)(3)(i) may be waived if the foreign corporation establishes to the satisfaction of the Commissioner or his or her delegate that the corporation, based on the facts and circumstances, acted reasonably and in good faith in failing to file a U.S. income tax return, including a protective return (as described in Treas. Reg. 1.882-4(a)(3)(vi)).

For this purpose, a foreign corporation shall not be considered to have acted reasonably and in good faith if it knew that it was required to file the return and chose not to do so. The regulations provide six factors to be considered in this analysis (see Treas. Reg. 1.882-4(a)(3)(ii)(A)-(F) for a list of these factors).

If the examination team, with the concurrence of the territory manager, recommends that a request for a waiver be granted, the territory manager will forward the waiver request package to the appropriate staff assistant.

Once the staff assistant confirms that the waiver request package is complete, they will forward the waiver request package to the CBA DFO for their determination to grant or deny the request for waiver. Follow paragraph (3) below if the CBA DFO agrees with the examination team’s assessment. Otherwise, follow paragraphs (4) and (5) below.

If the CBA DFO agrees with the examination team’s recommendation and determines that the waiver should be granted, the staff assistant will communicate the determination to the territory manager and the team manager, as well as to the Waiver Committee. The examination team will subsequently notify the taxpayer in writing of the determination.

If the CBA DFO does not agree with the recommendation to grant the waiver, the CBA DFO has the option to request additional information, and consult with the Waiver Committee in order to reach a final decision.

The staff assistant will communicate the CBA DFO’s final determination (either to grant or deny the waiver) to the territory manager and team manager, as well as the Waiver Committee. The examination team will subsequently notify the taxpayer in writing of the determination.

If the examination team, with the concurrence of the territory manager, recommends that a request for waiver be denied, the territory manager will forward the waiver request package to the staff assistant.

Once the staff assistant confirms that the waiver request package is complete, they will forward the waiver request package to the Waiver Committee as described in IRM 4.61.14.1.5 for its consideration (with a copy to the CBA DFO).

The Waiver Committee will ensure that, regardless of the type of business conducted, all recommendations for denial of waivers will be evaluated by an independent committee and handled consistently.

The staff assistant will schedule a conference call with the Waiver Committee, the examination team and the territory manager to discuss the case.

The team manager on the Waiver Committee will forward the waiver recommendation, or recommendations (if the Waiver Committee and the examination team still disagree) and the waiver request package, to the staff assistant.

The staff assistant will submit the recommendation(s) to the CBA DFO. The CBA DFO may request additional information or clarification from the Waiver Committee and/or examination team prior to making their determination.

The staff assistant will communicate the CBA DFO’s final determination to the territory manager, team manager and the Waiver Committee. The examination team will subsequently notify the taxpayer in writing of the determination.

Exhibit 4.61.14-3 contains scenarios to illustrate these procedures.