Patel Law Offices Blog

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