IRS Seeks to Identify Filers of Missing or Incorrect Forms 1042

On June 7, 2019, the IRS announced the launch of Audit Campaign 817, which will focus on the 2017 Forms 1042 and 1042-S. The intention of the campaign is to identify incorrectly filed Forms 1042 as well as withholding agents who had an obligation to file but failed to do so. 

As part of this campaign, the IRS will send thousands of letters over the course of a few weeks starting in June 2019, requesting clarifying information from withholding agents whose 2017 filings—or lack thereof—have been identified as meeting the below criteria.

Target Areas of Campaign 817

Under Campaign 817, three general categories will be under review:

  • Withholding agents who were expected to have a 2017 Form 1042 filing obligation, but didn’t file the form with the IRS
  • Withholding agents who submitted a Form 1042 that included errors, such as missing information or information that doesn’t reconcile on the face of the form
  • Withholding agents who submitted a Form 1042 filing that didn’t reconcile with the corresponding Forms 1042-S filed

Penalties

If a notice is received as a result of this campaign, the IRS has stated that penalty abatements won’t be available. Further, if a withholding agent doesn’t respond to the letter received, it’s likely that the case will be referred for audit.

Purpose of the Campaign

The IRS stated that, in recent years, it’s become aware that withholding agents are providing inconsistent or incorrect Form 1042 filings. Additionally, the IRS has become aware that they haven’t received Forms 1042 from some withholding agents in certain categories who were expected to have an obligation to file. As part of an effort to curb incorrect or missing filings, the IRS has launched Campaign 817.

Impact on Filers

Campaign 817 will be a cross-industry investigation, so the reach will be extensive. If you had an obligation to file Forms 1042-S and 1042, you can review your 2017 filings to determine if you have exposure to this campaign.

The IRS will be open to voluntary disclosures at this time, and as noted above, once a notice is received, penalty abatement won’t be an option.

We’re Here to Help

For more information on how this update could affect you and your business, contact your Moss Adams professional or inforeportingwithholding@mossadams.com.