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OPINION
The interpretation and application of section 6038A involve
issues of first impression; there are but two published cases12
that discuss section 6038A.
In her notice of deficiency, respondent cited the section
6038A(e)(3) noncompliance penalty as statutory support for her
determination. Section 6038A(e)(3) is available to respondent if
a taxpayer fails to maintain specified records and to honor a
summons as required by section 6038A(e)(2) or if a taxpayer fails
to obtain authorization to be a related foreign corporation's
agent as required by section 6038A(e)(1). As respondent's notice
of deficiency relies on section 6038A(e)(1), we focus on that
section and its relationship to section 6038A(e)(3).13
A. Whether Section 6038A Applies to Petitioner
Section 6038A provides in pertinent part:
12 Asat, Inc. v. United States, 76 AFTR 2d 95-7821, 95-2
USTC par. 50,498 (N.D. Cal. 1995); Nissei Sangyo Am., Ltd. v.
United States, 76 AFTR 2d 95-5736, 95-2 USTC par. 50,327 (N.D.
Ill. 1995).
13 The notice of deficiency is predicated on the failure by
petitioner to obtain ASAT, Ltd.'s authorization of agent.
Petitioner's failure, however, to comply with the summons issued
by respondent as required by sec. 6038A(e)(2), and to seek timely
judicial review of the notice of noncompliance as required by
sec. 6038A(e)(4), appears to provide respondent with an
additional ground for applying the noncompliance penalty
adjustment of sec. 6038A(e)(3). See Asat, Inc. v. United States,
supra.
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