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.
Under Campaign 817, three general categories will be under review:
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.
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.
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.
For more information on how this update could affect you and your business, contact your Moss Adams professional or inforeportingwithholding@mossadams.com.