Patel Law Offices Blog
Foreign pension accounts reporting on the FBAR
Several clients have asked us in recent weeks whether foreign pension accounts are reported on the FinCen114 (FBAR). Most employer foreign pension plans fall under one of two types: defined benefit plan or defined contribution plan. A defined benefit plan
US Reporting of Foreign Retirement Accounts
Many clients contact our office regarding the failure to report their foreign retirement account. Such accounts need to be fully reported on an FinCen 114 (FBAR) and IRS Form 8938. Besides the need to disclose a foreign retirement plan on
Is the IRS Finally Receiving Increased Funding?
After months of back and forth, it appears that additional funding is on its way to the Internal Revenue Service (IRS) with the Inflation Reduction Act of 2022 (Act). The Act would spend nearly $80 billion on the IRS and
IRS Extends Late Portability Election Automatic Relief from 2 to 5 Years
On July, 8, 2022, the Internal Revenue Service released Revenue Procedure 2022-32, which provides a simplified method for certain estates to make a late portability election to allow the surviving spouse of the decedent to use the decedent’s unused unified
IRS Summons to a Third Party: Duties and Rights
One of the most common evidence-gathering tactics used by the Criminal Investigative Division is the issuance of summonses. The IRS has very broad discretion to use summonses, which are authorized by statute to allow special agents to assess “correctness of
Maryland Retail Store Owner Guilty of Tax Fraud and Tax Evasion
Sunil Chawla (“Chawla”), age 66, of Berlin, Maryland, pleaded guilty this week to tax fraud. As part of his plea agreement, Chawla will be required to pay $70,000 in restitution. According to his guilty plea, Chawla owned and operated “India
Specific Steps for Applying to the IRS Streamlined Foreign Offshore Procedures
If you are a US Person and not compliant for not properly reporting foreign accounts, assets, investments, and income to the IRS, you may have learned about Streamlined Procedures. If you live outside the US and are eligible to use
US Supreme Court to Rule on FBAR Penalties Case
The debate over FBAR penalties for non-willful failure to disclose all of an individual’s or business’ foreign bank accounts has reached the Supreme Court. The issue is whether the maximum $10,000 Foreign Bank Account Reporting (FBAR) penalty should apply on
Welcome news from IRS for late Form 3520 penalties
On its website, the IRS has announced that it has retired its Form 3520/3520A compliance campaign. In welcome relief for taxpayers, the IRS also indicates in updated IRM procedures that it will assert only one penalty — rather than the two
The IRS’s 2022 Dirty Dozen tax scams
The Internal Revenue Service today wrapped up its annual “Dirty Dozen” scams list for the 2022 filing season, with a warning to taxpayers to avoid being misled into using bogus tax avoidance strategies. The IRS warned taxpayers to watch out
Tax preparer sentenced to prison for fraudulent deductions on federal income tax returns
Nearly $3.5 million estimated tax loss over four years A tax preparer was recently sentenced in U.S. District Court in Seattle, to a year and a day in prison for 14 counts of aiding and abetting the filing of false
New Webinar: An Introduction to the Taxation of Passive Foreign Investment Companies
Event Details May 9, 2022 3:00 pm to 4:00 pm Many investors unknowingly invest in Passive Foreign Investment Companies (PFICs) and as a result must file IRS Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or
New Webinar: Resolving International Tax Compliance Disputes: FBAR Controversy, Penalties, Appeals, Form 3520/3520-A, Form 5471
I am pleased to announce that I will be speaking in an upcoming Strafford live video webinar, “Resolving International Tax Compliance Disputes: FBAR Controversy, Penalties, Appeals, Form 3520/3520-A, Form 5471” scheduled for Wednesday, May 11, 2022 1:00pm-2:30pm EDT. The IRS has continually
How to Benefit from Tax Treaties
Paying taxes twice on the same income is a concern most U.S. citizens have if they earn income abroad. Luckily, the U.S. has entered into tax treaties with many countries to help alleviate that concern. IRS Form 8833 is how
FBAR compared to Form 8938: Differences, Which to File, When to File, etc.
We receive many client queries regarding FBAR and Form 8938. If you are a U.S. person and you have assets and accounts in a foreign country, you may need to submit Form 8938 and/or FinCEN Form 114 (Report of Foreign
An exception to PFICs in Foreign Pension Plan Accounts
Certain US persons may become subject to the passive foreign investment company (PFIC) regime if they own an interest in a foreign corporation that invests primarily in passive investments (or become US persons while owning such interests). Typically, foreign mutual
Passive Foreign Investment Company Tax & Mark-to-Market (MTM) election
A PFIC is a passive foreign investment company. One of the most common types of PFIC is ownership of a foreign mutual fund. Our office has worked with clients from dozens of countries. However, Indian mutual funds are especially problematic
IRS Releases New IRS 2022 FBAR Fact Sheet
The IRS released its new 2022 FBAR Fact Sheet last month, which comprehensively provides all information related to the FinCEN FBAR Form 114. Interestingly, it fails to include the Delinquent FBAR Submission Procedure (or DFSP), which our office has successfully
US Tax Treatment of a UK Self-invested personal pension (SIPP)
We have had many clients with British retirement accounts and pensions, which often cause US tax complications. Self-invested personal pensions (SIPP) can be a complex account for US tax purposes. A straightforward pension for a British person can be very
Payment Apps like Venmo and Paypal Now Subject to Tax Reporting
Third-party peer-to-peer cash apps like Venmo, Paypal, Zelle, and Cash App have become popular and have become essential to everyday life. Under a little-publicized provision in the 2021 American Rescue Plan Act (ARPA), third-party peer-to-peer cash apps must begin reporting
IRS announces an update to its Voluntary Disclosure Practice Preclearance Request and Application
Last month, the IRS announced revisions to Form 14457 and its accompanying instructions. Specifically, the IRS updated Form 14457, Voluntary Disclosure Practice Preclearance Request and Application, to reflect a shift away from paper filing and include an expanded section on
Upcoming live video webinar: “FBAR and U.S. Tax Reporting: Compliance Requirements for Foreign Assets”
I am pleased to announce that I will be speaking in an upcoming Strafford live video webinar, “FBAR and U.S. Tax Reporting: Compliance Requirements for Foreign Assets” scheduled for Wednesday, March 16, 1:00pm-2:30pm EDT. The IRS has continually reaffirmed its commitment to
Small PFIC Exception to Filing Form 8621
The Form 8621 filing requirements for shareholders of a passive foreign investment company (PFIC) are in effect for the current tax season. The annual filing requirement is imposed on U.S. persons who are PFIC shareholders who do not currently file
Penalty relief for International Information Forms 5471, 5472, and 8865
US tax law imposes large penalties for the failure to timely file international information returns on Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations; Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign
A Lesson From Brown v. U.S.: A Defective Tax Refund Filing
The recent case from the U.S. Court of Appeals for the Federal Circuit in Brown v. the U.S. shows the detriments to Taxpayers who do not properly file their returns with the IRS in order to receive their tax refunds.
The Strange Case of U.S. v. Hughes: Willful and Non-Willful (at the Same Time?)
A recent decision from the District Court of Northern California has created more questions in the tax community about FBAR penalties. Usually, in challenging FBAR penalties, courts conclude that the US taxpayer will pay willful FBAR penalties, non-willful FBAR penalties,
How to Avoid Criminal Prosecution Through Voluntary Disclosure
The Voluntary Disclosure Practice is an IRS-created option of the IRS Criminal Investigations for U.S. Taxpayers at risk for criminal prosecution due to a tax-related offense. Taxpayers who have willfully failed to submit tax information reports may willingly submit a
All the Many FBAR Late Filing Procedures
The FBAR or Foreign Bank and Financial Account Reporting or FinCen Form 114 is a form which many U.S. taxpayers are unaware and unfamiliar with and thus many of them become noncompliant and delinquent. However there are a number of
A Lesson to be Learned from US v. Schwarzbaum: Bring Back the Foreign Funds to Pay FBAR Penalties
The recent case of U.S. v. Schwarzbaum shows U.S. taxpayers the length the United States will go to require a U.S. person to pay FBAR penalties, to the point of requiring the taxpayer repatriate money located outside the United States
Beware IRS Letter 6291
Many of our clients have recently received IRS Letter 6291, which begins with Why We’re Contacting You: “Our records for the tax years above show you did not properly report the foreign financial accounts on form 8938 statement of specified
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Recent Posts
- Foreign pension accounts reporting on the FBAR August 11, 2022
- US Reporting of Foreign Retirement Accounts August 8, 2022
- Is the IRS Finally Receiving Increased Funding? August 6, 2022
- IRS Extends Late Portability Election Automatic Relief from 2 to 5 Years July 13, 2022
- IRS Summons to a Third Party: Duties and Rights July 1, 2022
- Maryland Retail Store Owner Guilty of Tax Fraud and Tax Evasion June 30, 2022
- Specific Steps for Applying to the IRS Streamlined Foreign Offshore Procedures June 29, 2022
- US Supreme Court to Rule on FBAR Penalties Case June 26, 2022
- Welcome news from IRS for late Form 3520 penalties June 12, 2022
- The IRS’s 2022 Dirty Dozen tax scams June 11, 2022
- Tax preparer sentenced to prison for fraudulent deductions on federal income tax returns June 6, 2022
- New Webinar: An Introduction to the Taxation of Passive Foreign Investment Companies April 28, 2022