Patel Law Offices Blog

IRS Issues New Proposed Regs on Information Reporting on Foreign Gifts

The reporting of foreign gifts and inheritances is a very complex part of international tax law.  Many of our clients have been hit with large penalties for late filing Forms 3520 to report foreign gifts. Although many of these laws

Form 5471 Penalties Upheld in Latest Court Ruling

The D.C. Circuit handed the IRS a big win last week, holding that the IRS could assess international information return penalties for the failure to file Forms 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations.” The

NJCPA Seminar “The Corporate Transparency Act: What You Need To Know”

Parag Patel Esq. is a speaker this week at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “The Corporate Transparency Act: What You Need To Know”. You may email our office to receive the seminar materials. Seminar

IRS Guidance Targets Cash Reporting in the Cannabis Industry

The IRS closely monitors cash transactions to ensure businesses across all industries comply with tax laws. Cannabis businesses, often reliant on cash, face particular scrutiny. A recent IRS memo provides important insights into how the IRS expects cannabis businesses to

IRS International Fines Not Excessive: Form 3520 Penalties Upheld, Form 5471 Penalties Again Unassessable

International tax reporting requirements are complex, and the penalties for non-compliance can be severe.  In Mukhi v. Commissioner of Internal Revenue, the U.S. Tax Court considered a case involving a taxpayer who faced both criminal charges and significant civil penalties

IRS starting to audit employee retention credit (ERC)

Some businesses that claimed the employee retention credit (ERC) have begun receiving IRS letters telling them their claims are on hold because they are under audit and must provide additional information to the agency. Several law firms and media outlets

Questionable ERC could mean trouble for CPAs

The Internal Revenue Service announced in March that its compliance efforts related to the Employee Retention Credit had exceeded $1 billion. The agency specified that “more than 12,000 entities filed over 22,000 claims that were improper and resulted in $572

Employers Must Re-examine Employee Retention Credit (ERC) Claims

The Employee Retention Credit (ERC) offered financial relief to businesses struggling due to COVID-19. However, many ineligible applicants filed claims, or requested excessive amounts, often misled by aggressive marketing tactics. IRS Crackdown The IRS is now aggressively focusing on these

IRS Enforcement Campaign Targets High-Income Non-Filers

Recent funding increases through the Inflation Reduction Act (IRA) have revitalized the IRS’s enforcement capabilities.  A new campaign signals this shift, targeting high-income taxpayers who failed to file federal income tax returns.  This initiative represents a strategic pivot for the

Understanding the IRS Emphasis on BSA Filings in Tax Crime Investigations

The Internal Revenue Service (IRS) places significant emphasis on the role of Bank Secrecy Act (BSA) filings in supporting the work of its Criminal Investigations (CI) division. Their recent report indicates that an impressive 88% of investigations initiated in FY2023

Are Trusts Required to Report under the Corporate Transparency Act (CTA)?

Generally, the answer is no. Starting January 1, 2024, the Corporate Transparency Act (CTA) will require most U.S. corporations, LLCs, and other legal entities formed through state filings or foreign entities registered to do business in the U.S. (“Reporting Company”)

Is First-Time Abatement Applicable In International Penalty Cases?

The Internal Revenue Service (IRS) issued a memorandum from John E. Hinding, the Director of Specialized Examination Programs & Referrals, regarding penalty abatements for Forms 5471 and 5472. The memo was addressed to IRS Independent Office of Appeals employees focusing

National Taxpayer Advocate calls IRS Penalties Draconian and Inefficient

National Taxpayer Advocate Erin Collins recently issued her 2023 Annual Report to Congress. By law, the Advocate’s report is required to identify the 10 most serious problems taxpayers are experiencing in their dealings with the IRS and to make administrative and

Crypto is not = Cash currency for IRS reporting

The IRS released Announcement 2024-4, providing transitional guidance under section 6050I with respect to reporting transactions involving the receipt of digital currency. Generally, when receiving more than $10,000, IRS reporting is required. The announcement clarifies that, at this time, digital assets are

Interesting 2023 Foreign Account Cases

Foreign Account/FBAR confusion: In Kurotaki v. United States, 132 AFTR2d 2023-6138, a Hawaii federal district court determined that a U.S. green card holder who lived in Japan and spoke no English did not willfully fail to file FBAR reports as

Fantastic Recommendations for Form 3520

The American Institute of CPAs (AICPA) recently sent excellent recommendations to the Internal Revenue Service (IRS) against the IRS’ systemic assessment of penalties for late-filed Forms 3520, Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign

The New IRS ERC Voluntary Disclosure Program

The IRS ERC Voluntary Disclosure Program provides a special resolution opportunity for employers with erroneous or excessive ERC claims. The IRS recognizes that many erroneous or excessive ERC claims are partly due to aggressive marketing around ERC and promotors who

AICPA Makes Useful Recommendations For International Forms 3520/3520

The American Institute of CPAs (AICPA) submitted comment letters to the IRS requesting improvements be made to two international tax returns pertaining to foreign trusts. The AICPA requested that the IRS update, add to, and clarify Form 3520 and Form

New IRS Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back

This week, the IRS announced a new ERC voluntary disclosure program (ERCVDP) that has many distinctive features: Our firm has filed hundreds of IRS voluntary disclosure submissions over the years, and there are numerous similarities to other voluntary disclosure programs.

Parag Patel Esq. Speaks at NJCPA Seminar on”Employee Retention Credit Audit Issues: Surviving IRS Scrutiny”

Parag Patel Esq. was a featured speaker at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “Employee Retention Credit Audit Issues: Surviving IRS Scrutiny”. You may email our office to receive the seminar materials. Seminar descriptions is

The IRS’s First-Time Abatement (FTA) Penalty Waiver

There are currently more than 160 penalties contained in the US tax code. There is a penalty for nearly every possible reporting, filing, and payment requirement failure.  While penalties have long been a component of Federal tax laws, the number of

Parag Patel Esq. Speaks at NJCPA Seminar on”The Corporate Transparency Act: What You Need To Know”

Parag Patel Esq. was a featured speaker at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “The Corporate Transparency Act: What You Need To Know”. You may email our office to receive the seminar materials. Seminar descriptions

ERC Disallowance Letters 105C Sent to Taxpayers

The IRS has notified over 20,000 taxpayers via IRS Letter 105C (Disallowance of Claim) that their claims for the employee retention credit are being disallowed because entities either did not exist or did not have paid employees during the period

Corporate Transparency Act (CTA) Reporting Company Analysis and FAQs

The first step in Corporate Transparency Act (CTA) analysis is determining whether an entity is a Reporting Company. A “Reporting Company” means any entity (whether a corporation, limited liability company, or other entity types) that is (a) created by the

“Beneficial Owner” Analysis under the new Corporate Transparency Act

Starting January 1, 2024, the Corporate Transparency Act (CTA) will require most U.S. corporations, LLCs, and other legal entities formed through state filings or foreign entities registered to do business in the U.S. to file a Beneficial Ownership Information (BOI)

What Client Tax Advisors Should Do About the New Corporate Transparency Act

The Corporate Transparency Act (CTA), introduced as part of the 2021 National Defense Authorization Act and amending the Bank Secrecy Act, aims to enhance transparency in business ownership structures to combat financial crimes like money laundering and tax fraud. This

What to Expect if the IRS Audits Your Employee Retention Credit

The Employee Retention Credit (ERC) was a valuable tax credit available to businesses during the COVID-19 pandemic. However, the IRS has recently ramped up its audits of ERC claims, due to concerns about fraud and abuse. If you claimed the

Foreign Gifts and the Uncommon Form 3520: A Trap for the Unwary

We have had several clients recently subject to Form 3520 penalties, so we thought we would remind everyone of the need to timely file these forms when receiving a foreign gift. When a U.S. person receives a gift from a

Parag Patel Esq. Speaks at NJCPA Seminar on”Criminal Tax: What Tax Professionals Need to Know to Help Clients and Themselves”

Parag Patel Esq. will be a featured speaker this month at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “Criminal Tax: What Tax Professionals Need to Know to Help Clients and Themselves” Seminar descriptions is below: “Criminal

Parag Patel Esq. speaks at NJCPA Seminar ” Federal Tax Update and Latest Tax Controversy Hot Topics”

Parag Patel Esq. will be a featured speaker this month at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled ” Federal Tax Update and Latest Tax Controversy Hot Topics“. Seminar descriptions is below: Federal Tax Update and