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

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

Do You Have to Pay US Taxes on Foreign Inheritance?

We get this question almost daily…A U.S. person owes no U.S income tax on the receipt of an inheritance or gift from an individual living outside the United States. However, there are important legal considerations to review, including the Foreign

Beware of Currency Seizures

In the past two decades, the US Department of Homeland Security (DHS) seized over $2 billion in currency at airports mostly due to travelers’ failure to fill out the relevant form. There is no limit to how much currency or

Our Best Net Investment Income Tax (NIIT) Tax Minimization Planning Strategies

The NIIT is a 3.8 percent Medicare surtax imposed on the lesser of an individual’s (a) net investment income (NII), or (b) the amount of modified adjusted gross income (MAGI) that exceeds $250,000 for MFJ (married filing jointly) or $200,000

Watered-Down Build Back Better (BBB) For High-Income Taxpayers

After months of negotiations, the Democratic-led House of Representatives advanced the Build Back Better (BBB) Act to the Senate. The table below shows how the tax provisions have evolved since September. Many of the most controversial tax increase provisions were

Charitable Planning Strategies High-Net-Worth Individuals Need to Know for Year-End Tax Planning

This year has a few charitable tax law changes unique to 2021. We have compiled our top charitable tax planning ideas you may want to consider implementing this year before December 31st. 1.         Take advantage of the higher limit this

IRS Provides Form 5471 Information-Filing Relief For Dormant Foreign Corps.

Every foreign corporation in which a U.S. person is generally involved in any capacity with at least 10% interest must be reported to the IRS on Form 5471. This is the way for the IRS to prevent the disguised accumulation

IRS Updates Process for FAQs

IRS finally figured out that taxpayers need help with IRS frequently asked questions (FAQs). IRS places FAQs on its website and taxpayers naturally read them and believe them to be true and reliable. IRS has issued more than 1,100 FAQs

New Tax Changes are Blowing in the Wind

There are several tax proposals that are under Congressional consideration, and the Biden administration released information concerning his proposal, the “American Families Plan.” The U.S. House Ways and Means Committee released proposed budget reconciliation legislation on September 13, 2021. The