Penalties for Not Filing Form 3520

The IRS requires a U.S. person receiving a gift from a foreign individual, corporation, partnership, or estate to report by filing Part IV Form 3520. Failure to file or late, incorrect, or incomplete filing is subject to a severe penalty.

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

When a U.S. person receives a gift from a foreign individual, corporation, partnership, or estate which is treated as a gift or bequest and excluded from gross income, the recipient may be required to file Part IV of Form 3520.

Expect new aggressive IRS targeted enforcement next year.

For years, the government has known about the widening tax gap, which reports uncollected taxes among US taxpayers. However, typically, the government does not do much to address the increasing loss of tax revenue. It appears that is about to

The big question on a tax increases is not “if” but “when”

We expect taxes to increase. The big question however is when the increase(s) will take effect. Although it is politically unpopular and unfair to change tax laws after people rely on them in making transactions through the year, legally (and

The Dreaded IRS Letter 6185: “We received information that you have a foreign account”

Many of our clients have recently received IRS Letter 6185, which begins with “Why we’re writing to you: We received information that you held an interest in one or more foreign financial accounts, foreign entities, or foreign financial assets.” This

Increased IRS Enforcement Expected Against High-Income Taxpayers

The US Treasury Inspector General for Tax Administration (TIGTA), in two recent reports, said that the IRS collected more tax revenue in 2019 than in any other previous year but, at the same time, overlooked high-income delinquent taxpayers and so

New Favorable Court Decision: One penalty (not multiple) applies for late FBAR filing

The U.S. Court of Appeals for the Ninth Circuit today—in a case of first impression for the circuit—held that the IRS is limited to imposing one penalty for the untimely filing of a single accurate “Report of Foreign Bank and

Parag Patel to be Speaker for Estate Planning at Practicing Law Institute’s NJ Basic CLE Marathon 2021

Parag Patel will be a speaker on Estate Planning at the Practicing Law Institute’s (PLI) New Jersey Basic CLE Marathon 2021. Mr. Patel’s presentation will be a general introduction for attorneys practicing in estate planning matters seeking to learn about common

Parag Patel to be Speaker for Estate Administration at Practicing Law Institute’s NJ Basic CLE Marathon 2021

Parag Patel will be a speaker on Estate Administration at the Practicing Law Institute’s (PLI) New Jersey Basic CLE Marathon 2021. Mr. Patel’s presentation will be a general introduction for attorneys practicing in Estate Administration and probate matters seeking to learn

New IRS Relief for Taxpayers Experiencing COVID-related Difficulties

The IRS has announced new initiatives to help taxpayers experiencing Covid-related difficulties (which probably applies to most people) who have unpaid federal tax liabilities. Specifically, the IRS has announced the below relief: ·  The IRS is highlighting reasonable cause assistance

New Tax Laws Predicted

When elected, most Presidents have successfully enacted many significant tax proposals in the first two years in office. President Biden is doing things a little differently. Because of the coronavirus pandemic, Biden has divided his tax proposals into two efforts.

Rare confluence of tax law and immigration law

A recent case highlights the rare confluence of tax law and immigration law. This week a federal grand jury indicted Lucia Andrea Gatta, with tax evasion and failing to file Reports of Foreign Bank and Financial Accounts (FBARs) and naturalization

The New DIIRSP: I like the old better

Late last year, the IRS revised the Delinquent International Information Return Submission Procedures (“DIIRSP”, which some people phonetically pronounce as “dersp”) to eliminate language limiting the DIIRSP to situations where the taxpayer has not failed to report tax.  Old DIIRSP:

Automatic Form 5471 and 5472 Penalties in Spotlight by 2020 National Taxpayer Advocate Report

IRS National Taxpayer Advocate yesterday released her 2020 annual report to Congress yesterday. Federal law requires the Annual Report to Congress to identify the “most serious problems” encountered by taxpayers and to make administrative and legislative recommendations to mitigate those

Client Case Study: Tax Savings Now

Joe Biden is the President-elect, and the House and Senate are Democratic. There could be massive tax increases on the wealthy, including estate taxes. Clients that did not complete planning in 2020 should be advised to use their gift exemptions

Democratic Win Means Estate Tax Law Changes

The results of the Georgia Senate election are in and Democrats have secured a Senate majority.  As a result, we expect tax changes. President-elect Joe Biden’s tax plans were laid out during his campaign last year. However, we did not

Canceled Debt: Taxable or Not

During the pandemic many clients’ businesses have adversely impacted by lockdowns and many negotiations between borrowers and lenders have occurred or will occur in 2021. There will be many loan modifications, bankruptcies, and foreclosures. In order to properly analyze the

Start 2021 with a few New Year’s tax planning resolutions

COVID-related legislation drove a lot of tax changes for 2020 and President-elect Joe Biden has proposed many tax changes for 2021. With tax laws already very complicated, we have some resolutions to get ahead in 2021: Beware of 2021 tax

Recent Webcast to DC Bar Association on Post-Election Estate Planning and Audits: Tax Considerations For the Unexpected

Parag Patel last month co-presented a Tax Law Webcast to the District of Columbia (D.C.) Bar Association on “Post-Election Estate Planning and Audits: Tax Considerations for the Unexpected”. The program was hosted by D.C. Bar Estates, Trusts and Probate Law,

2020 New “Universal” Deduction for Charitable Contributions

As clients look for last-minute tax-saving strategies in 2020, one area that should be considered involves the changes to the charitable giving rules made by the 2020 CARES Act. The CARES Act established a ‘universal’ provision that allows you to deduct non-itemized, above-the-line

“Financial interest” or “Signature Authority” in a Foreign Account

Any United States person with a “financial interest” in or “signature authority” over a foreign financial account, where the aggregate value of all foreign financial accounts exceeds $10,000 at any point during the year, must file a Foreign Bank Account

Smart Planning for Expected Capital Gains Tax Increases

One of the most likely changes in the tax law will be an increase in tax rates. For example, the Biden campaign has proposed increasing long-term capital gains and qualified dividends currently at 20% up to ordinary income rates at

Tax Strategies to Explore Now

It appears more likely than not the United States is headed towards a split government next year. For purposes of tax planning next year, we can probably assume that control of Congress is divided between Republicans and Democrats and we

IRS Revises Delinquent International Information Return Submission Procedure (DIIRSP)

The IRS revised its Delinquent International Information Return Submission Procedure (DIIRSP) last week. The DIIRSP provided an alternative 0% penalty voluntary disclosure process to taxpayers other than the Offshore Voluntary Disclosure Program or the Streamlined Filing Compliance Procedures to file

Estate Planning for 2021 and Beyond: SLATs

The estate and gift tax exemption, which allows each U.S. person to pass a certain amount of assets free of the federal estate and gift tax, was doubled under the 2017 Tax Cuts and Jobs Act. The current estate and

Now is the time to explore a Spousal Lifetime Access Trust (SLAT)

With the upcoming election and potential tax law modifications based on the outcome, high net worth married couples should consider meeting with their advisors to determine what they can do to prepare for potential tax changes. One strategy worth consideration is

FBAR Deadline Slightly Extended

After a misworded posting caused confusion about the 2020 deadline to file FBARs (i.e., FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)), Treasury’s Financial Crimes Enforcement Network (FinCEN) has extended the deadline to Oct. 31. Last Wednesday,

IRS Warning Letter Warns Foreign Business Owners About Section 965 Transition Tax Enforcement

The IRS has recently begun sending “soft letters” (warning letters) to U.S. taxpayers owning foreign companies about IRC Section 965 transition tax compliance. In July 2020, The IRS Large Business & International (LB&I) division expanded its list of compliance campaigns

To Gift or Not to Gift? Gift.

For individuals and families who wish to pass assets to children, grandchildren, and more descendants as part of their overall estate plan, gifting now, rather than later, could provide significant tax benefits.  We are advising clients of the likely impact

The FinCEN Files Leak

The FinCEN Files are leaked documents from the US Financial Crimes Enforcement Network (FinCEN), that have been globally earlier published this week. FinCEN is an agency US Treasury that collects and analyses forms to combat money laundering, terrorism financing, evasion