What is a Mark-to-Market (MTM) election for a Passive Foreign Investment Company (PFIC)?

Several clients have recently asked us about the Mark-to-Market (MTM) election for a Passive Foreign Investment Company (PFIC). A MTM election for a Passive Foreign Investment Company (PFIC) is an option that allows a taxpayer to treat their investment in

Comments on IRS Form 3520 to Report Foreign Gifts

The Florida Bar Tax Section recently made some excellent comments in response to the Internal Revenue Service’s request for comments concerning Forms 3520 and 3520-A. The comments were intended to enhance the quality, utility, and clarity of the information to


Join us for a Complimentary CPE Presentation on Reporting Foreign Assets & Activities: Requirements and Challenges Penalty structure Best practices in reporting IRS penalty avoidance programs Latest Supreme Court case impacting FBAR penalties Summary of most common international tax reporting forms

Tax Court Rules IRS Cannot Assess or Collect Form 5471 Penalties

Last week the US Tax Court issued its opinion in Farhy v. Commissioner, ruling that the Internal Revenue Service (IRS) could not assess or collect penalties under Internal Revenue Code (Code) Section 6038(b) for a late-filed Form 5471 against Alon Farhy. This is a big

Foreign Gift Received: Form 3520 Penalties Eliminated in New Court Case

The US DOJ Tax Division recently conceded penalties assessed against a police officer for failing to file informational returns on for a foreign gift. Krzysztof Wrzesinski, a Polish-American citizen, had failed to file Form 3520, or the “Annual Return to

Rare Supreme Court Ruling Favors Taxpayers!

The US Supreme Court rarely hears tax cases, but this week ruled on a case in favor of taxpayers. The case was originally heard because lower courts issued conflicting opinions. This week, the Supreme Court scaled back the federal penalties

Demystifying IRS Agents

The IRS is planning to hire thousands of new agents in the next few years.  Some politicians and the media have portrayed the new hires as a harassing threats to taxpayers. In my decades of experience as a tax attorney

New Rules: New Jersey Finally Follow Federal S Elections

On December 22, 2022, New Jersey Governor Murphy signed into law a new rule that eliminates the need to make separate New Jersey S elections. The law primarily conforms New Jersey’s laws regarding the making of S elections to federal law.

Top 5 tax fraud recoveries in 2022

Tax fraud can take many different forms. Below are the top federal tax fraud cases last year. Crypto Seizures: more than $7 billion. In February, 2022, it was announced that IRS Criminal Investigations Cyber Crime Unit led the seizure and recovery

Sales Tax for Home Improvements

Since New Jersey sales tax rules differ based on the type of work performed, it is important to understand the classifications to avoid paying too much or too little in taxes. What work is exempt from sales tax? For owners

New FATCA / CRS reporting penalties in India

The new 2023 Tax Budget in India has many new proposals. However, the most important proposal for investors, especially non-resident Indians, is a new penalty for providing inaccurate information for KYC (Know Your Customer) including information provided in FATCA and

65 Day Election on March 6, 2023

Trustees and executors have the ability to make certain elections on, or before, March 6, 2023 that could affect 2022 tax returns of the trusts and estates for which they are fiduciaries, as well as the returns of the beneficiaries

High Penalties for failure to file an FBAR: Not Really Enforced (yet)?

U.S. persons, including U.S. citizens, residents, corporations and estates, must report certain foreign financial accounts, including bank accounts, brokerage accounts and saving accounts to the U.S. Treasury department each year. If the aggregate value of the foreign financial accounts exceeded

IRS Audits of Millionaires Remain Very Low

The Internal Revenue Service still rarely audits millionaires, according to a new report published by Syracuse University’s Transactional Records Access Clearinghouse. Despite calls to ramp up scrutiny of high-net-worth individuals’ tax returns and wealthy tax evaders and a legislative push

IRS Listens, and Postpones Increased Form 1099 Reporting for PayPal and Venmo

As a result of taxpayer confusion, lack of guidance, concerns about the existing backlog, and impact on the upcoming filing season, tax professionals urged the IRS to postpone the implementation of the new reporting requirements of Forms 1099-K. Good news:

Accountant-Client vs Attorney-Client Confidentiality

Both Accountant-Client vs Attorney-Client Confidentiality are designed to protect the privacy of the client and to ensure that the client can trust their lawyer or accountant to handle sensitive information with care. However, there are some major differences between the

Estate Planning: List of To-Do Items

The idea of a visit to an attorney for your estate planning can be unsettling and daunting for many people. As a result, people often procrastinate. To help facilitate the process below is a list of to-do items or at

How Long is the Tax Fraud Statute of Limitations?

The question of how much time the government has to pursue tax fraud (also known as the statute of limitations) is often misunderstood. It is important to note that the indefinite or unlimited fraud statute refers to civil tax fraud,

The Taxpaper Roadmap (seriously?)

The Taxpaper Roadmap was recently created by The Taxpayer Advocate Service, an independent organization within the IRS. This map illustrates, at a very high level, the stages of a taxpayer’s journey, from getting answers to tax law questions, all the

New Portability Election Extension Prevents Lost Estate Tax Exemption

Thanks to the Internal Revenue Service’s release of Rev. Proc. 2022-32, married couples who are not otherwise required to file an estate tax return at the death of the first spouse now have substantially more time to make a portability

What I learned at the 2022 National Institute on Criminal Tax Fraud and Tax Controversy in Las Vegas

I just returned from the American Bar Association Section of Taxation’s annual National Institute on Criminal Tax Fraud and Tax Controversy in Las Vegas, which is the largest gathering of criminal tax fraud and tax controversy attorneys in the nation.

Parag Patel Esq. was a featured speaker at the National Association of Enrolled Agents (NAEA) International Tax Certificate Program

Parag Patel Esq. was a featured speaker at the National Association of Enrolled Agents (NAEA) International Tax Certificate Program event from December 12-16, 2022. The five-day educational event focused on international taxation for tax professionals. Mr. Patel discussed the tax

New IRS FBAR Practice Unit

The IRS LB&I recently issued its Practice Unit on FBARs.  Practice Units are “job aids” and training materials intended to describe for IRS agents helpful practices about tax concepts in general and specific types of tax reporting forms. The FBAR

Do Inherited Foreign Assets Receive a Step-up in Cost Basis for U.S. Tax Purposes?

A common question asked by clients when receiving an inheritance from outside the United States is about the U.S. cost basis and receiving a step-up in basis on foreign assets owned by a non-U.S. person. Understanding the U.S. cost basis

Forms 5471, 5472, 3520 Partial Penalty Relief Still Available for 2019 and 2020 Returns

IRS Notice 2022-36 provided relief for certain taxpayers from certain failure to file penalties and certain international information return penalties with respect to tax returns for tax years 2019 and 2020 that are filed on or before September 30, 2022.

Parag Patel Esq. speaks at New Jersey Society of Certified Public Accountants (NJCPA) Annual Tax Seminar: “A New Foreign Frontier: Foreign Income & Asset Reporting Update”.

Parag Patel Esq. will be a featured speaker at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “ A New Foreign Frontier: Foreign Income & Asset Reporting Update ” on November 18, 2022. Seminar Summary: The IRS

IRS Announces Increased 2023 Gift Tax Annual Exclusion, Gift, and Estate Tax Exemptions

The Internal Revenue Service recently released the annual inflation adjustments for tax year 2023, which include welcome increases for wealth transfer tax planning. The gift tax annual exclusion will increase for the second year in a row, rising to $17,000

Parag Patel Esq. speaks at New Jersey Society of Certified Public Accountants (NJCPA) Annual Tax Seminar: “2022 Federal Tax Update and Latest Tax Controversy Hot Topics”.

Parag Patel Esq. will be a featured speaker at a New Jersey Society of Certified Public Accountants (NJCPA) Seminar entitled “2022 Federal Tax Update and Latest Tax Controversy Hot Topics” on November 18, 2022. Seminar Summary: With the pandemic fading

Wash Sale Benefits for Cryto Investors

Crypto investors have a reputation for hanging on to their coins through the ups and downs of the market’s dramatic gyrations. The wash sale may help crypto investors with tax loss benefits. WHAT IS A WASH SALE? The wash sale

What is the U.S. tax on Inheritances from a Non-U.S. Person to U.S. Person?

We get this question a lot… It is important to stress that there are no U.S. taxes owed by a U.S. citizen or green card holder directly on receiving any inheritance (whether received from a U.S. or non-U.S. person). However,