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to ASAT, Ltd., as that term is used in section 1.6038A-5(e),
Income Tax Regs. In sum, we hold that section 6038A does apply
to petitioner.
B. Failure To Designate Agent Issue
The section 6038A(e)(3) noncompliance penalty is operative
in this case if petitioner did not comply with section
6038A(e)(1), which provides:
(e) Enforcement of Requests for Certain Records.--
(1) Agreement to treat corporation as agent.--The
rules of paragraph (3) shall apply to any transaction
between the reporting corporation and any related party
who is a foreign person unless such related party
agrees (in such manner and at such time as the
Secretary shall prescribe) to authorize the reporting
corporation to act as such related party's limited
agent solely for purposes of applying sections 7602,
7603, and 7604 with respect to any request by the
Secretary to examine records or produce testimony
related to any such transaction or with respect to any
summons by the Secretary for such records or testimony.
The appearance of persons or production of records by
reason of the reporting corporation being such an agent
shall not subject such persons or records to legal
process for any purpose other than determining the
correct treatment under this title of any transaction
between the reporting corporation and such related
party.
Petitioner stipulated that it did not obtain the authorization of
ASAT, Ltd., to be its agent until after the notice of deficiency
was issued. Section 1.6038A-5(b), Income Tax Regs., requires
that the authorization be provided to the IRS within 30 days
after the IRS requests it; petitioner failed to meet the
deadline.
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