Correcting Common FBAR Errors

- By : Parag Patel

…requires careful consideration. The IRS may impose penalties if it later determines that the FBAR error was willful or due to negligence. On the other hand, no penalties may be…

IRS Form 8621 Frequently Misunderstood

- By : Parag Patel

…limit from commencing, granting the IRS an unlimited period to scrutinize the return and any associated PFIC income. Potential for Audits and Subsequent Penalties: Although Form 8621 lacks specific penalties,…

IRS FBAR Penalties Are Now Unmitigated

- By : Parag Patel

penalties that it can issue (from per account(s) to per year). The maximum penalty typically will be a $10,000 penalty per year. These references are specifically to non-willful penalties and…

HSBC Bank Expects Significant Penalties from US Government for Violations

- By : Parag Patel

…of possible amounts, of any fines and/or penalties. “As matters progress, it is possible that any fines and/or penalties could be significant,” HSBC added. Way back in 2011, the US…

Reasonable Cause Defense Denied: FBAR Penalties Assessed by Court

- By : Parag Patel

  In the recent 2019 case U.S. v. Ram Agrawal, a US District Court rejected a taxpayer’s reasonable cause defense against foreign bank account reports (FBARs) penalties. It ruled in…

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

- By : Parag Patel

…large penalties may be imposed on a taxpayer if the IRS later discovers that an inheritance was not properly declared when received using Form 3520. As one will see throughout…

Time Running Out for HSBC India accountholders sought by IRS

- By : Parag Patel

…imposition of additional taxes, interest and penalties. HSBC accountholders who want to avoid the excessive penalties that may be imposed by the IRS may consider the 2011 IRS Offshore Voluntary…

IRS’ first-time penalty abatement administrative waiver (FTA)

- By : Parag Patel

…failure-to-deposit penalties. The IRS is not explicit in its Internal Revenue Manual (IRM), but in practice, the IRS has granted FTAs for S corporation and partnership late-filing penalties. For individual…

Top 10 factors to consider before deciding to opt out of OVDI or OVDP

- By : Parag Patel

…the taxpayer with certainty with respect to the magnitude of the penalties to be assessed and assurance that such penalties will not be greater than could otherwise be applied (including…

The Strange Case of U.S. v. Hughes: Willful and Non-Willful (at the Same Time?)

- By : Parag Patel

…US taxpayer will pay willful FBAR penalties, non-willful FBAR penalties, or no FBAR penalties. U.S. v. Hughes is a strange case however because the court held that the taxpayer was…

How to Fix an Erroneous Filed Tax Return without Penalties

- By : Parag Patel

…date? The advantage of fixing the return now, before the due date, is that the possibility of accuracy-related penalties associated with the incorrect information could be eliminated. As a summary:…

Substantially Completed Form 5471 is Required to be Filed

- By : Parag Patel

IRS has recently released a new International Practice Unit (IPU) providing guidance to its examiners on the monetary penalties applicable if certain categories of U.S. shareholders fail to comply with…

IRS posts its “wins” involving offshore accounts

- By : Parag Patel

…IRS and to pay more than $2.5 million in civil penalties failing to file Reports of Foreign Bank and Financial Accounts (FBARs). July 25, 2012 — Luis A. Quintero, of…

How to Defend Against FBAR Penalties

- By : Parag Patel

…which warrants a referral to the IRS Criminal Investigation Division. Critical to any FBAR examination are issues surrounding willfulness, which directly impacts the imposition of penalties. To establish a willful…

New voluntary disclosure program for offshore accounts in 2011

- By : Parag Patel

…any new program is likely to follow the same approach of providing certain penalties for all participants. One reasonable possibility is that a second program might have enhanced understatement penalties

For Tax Professionals: A Guide to the IRS’s Voluntary Disclosure Practice

- By : Parag Patel

…is not designed to address the IRS’s discretion whether to impose civil tax or FBAR penalties. The Internal Revenue Manual states that a voluntary disclosure made by a taxpayer will…

One Month Countdown: The Deadline is Nearing for U.S. Taxpayers with Undisclosed Accounts to Come Forward

- By : Parag Patel

…eight years as well as accuracy related and/or delinquency penalties; and participants must file all original and amended tax returns and include payments for taxes, interest and accuracy related penalties….

The “Quiet” or “Silent” Disclosure

- By : Parag Patel

…the 2012 OVDP, these penalties are merely discretionary under a “quiet” disclosure. An examiner reviewing a “quiet” disclosure has the ability to assess penalties in excess of those under 2012…

New FinCEN Form 114 (FBAR) Filing Rules Announced

- By : Parag Patel

…the penalties can be overwhelmingly high, there have been a host of Voluntary Disclosure Programs offered by the IRS that can potentially reduce or even eliminate the penalties noted above….

New IRS Guidelines for Willful FBAR violations

- By : Parag Patel

…some much-needed guidance to taxpayers and examiners alike for FBAR penalties. Since the actual amount of the penalties is still largely determined based upon “facts and circumstances” there remains a…

The legal standard of “willfulness”: Opt out to avoid high penalties

- By : Parag Patel

…the Taxpayer was a grantor of, or transferor to a foreign trust (which requires filing Form 3520).   A willful failure to file a FBAR can lead to a felony…

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

- By : Parag Patel

…with respect to dormant foreign corporations and will not be subject to penalties related to the failure to timely file a complete Form 5471 and to timely furnish information requested…

2 recent IRS developments that will impact Indian Americans

- By : Parag Patel

…foreign country with assets in excess of $10,000 Failure to comply with these can attract civil as well as criminal penalties. Civil penalties can be as high as 50% of…

New EZPASS OVDP Without Any Penalties for Non-Resident U.S. Taxpayers

- By : Parag Patel

…returns, for the past three years; and delinquent FBARs for the past six years. This seems to be a new EZPASS or express OVDP without any penalties. Taxpayers with higher…

To Opt Out or Not Opt Out: That is the Question

- By : Parag Patel

…mandatory under the 2011 OVDI/OVDP, these penalties are merely discretionary under a “quiet” disclosure. An examiner reviewing a “quiet” disclosure has the ability to assess penalties in excess of those…

American Citizens Abroad (ACA) writes letter to IRS Commissioner regarding unfair offshore asset treatment

- By : Parag Patel

…disclosure program (OVDP) unfairly, and she ordered several IRS divisions to take various steps to correct this treatment, including allowing taxpayers who had paid penalties under the OVDP to request…

Internal Revenue Service again issues annual reminder to US persons to report foreign accounts and foreign income

- By : Parag Patel

…and beyond the civil penalties and a myriad of other penalties that may apply. The criminal penalties can include an additional fine up to $500,000 and up to 10 years…

Analysis: IRS New Disclosure Program

- By : Parag Patel

…It is not clear whether other civil penalties will be imposed on the other years in the disclosure period. Taxpayers who wish to request the imposition of lower accuracy-related penalties

IRS’s four offshore programs have netted 39,000 taxpayers and over $5.5 billion

- By : Parag Patel

penalties greater than $1 million represented about 6 percent of all the 2009 OVDP cases, but accounted for almost half of all offshore penalties. Taxpayers from these cases disclosed a…

Willful FBAR Penalties

- By : Parag Patel

…return. Taxpayers who willfully file an FBAR late or not at all will be subject to high penalties for willful FBAR violations. A taxpayer will be considered willful if there…