IRS Announces New Rules for FBAR Penalties

- By : Parag Patel

There are two types of penalties applicable to FinCEN Form 114 (Report of Foreign Bank and Financial Accounts) (FBARs): (1) Non-Willful and (2) Willful. The penalties are theoretically assessed per…

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

- By : Parag Patel

…unavailability of the requisite information, and IRS error. The report recommends manual penalty assessment and automatic abatement of penalties. We applaud the IRS for noticing these unfair penalties. Unfortunately, the…

OVDI: Requesting issuance of a FBAR warning letter instead of penalties

- By : Parag Patel

…than assert penalties under the mitigation guidelines. FBAR penalties are determined per account, not per unfiled FBAR, for each person required to file. Penalties apply for each year of each…

National Taxpayer Advocate calls IRS Penalties Draconian and Inefficient

- By : Parag Patel

…requests before assessing penalties when these requests are submitted in conjunction with IIRs potentially giving rise to penalties; 3) extend eligibility for first-time abatement to all IIR penalties regardless of…

Welcome news from IRS for late Form 3520 penalties

- By : Parag Patel

penalties assessed by the campus when the forms are received late or are incomplete” (see www.irs.gov, under the tab “Forms 3520/3520-A Non-Compliance and Campus Assessed Penalties”). Shortly thereafter, in November 2018, the IRS…

Federal District Court Holds that FBAR Penalties in Excess of $100,000 is Unlawful

- By : Parag Patel

penalties. The IRS assessed penalties for willful failure to timely file FBARs from 2007 to 2010. The individual had four separate FBAR violations in 2007, and the associated penalties totaled…

Tax Court Rules IRS Cannot Assess or Collect Form 5471 Penalties

- By : Parag Patel

…assess and collect Form 5471 penalties. It is also possible that other penalties for failure to file certain international information returns (e.g., Form 3520 for reporting gifts received from foreign…

A Lesson to be Learned from US v. Schwarzbaum: Bring Back the Foreign Funds to Pay FBAR Penalties

- By : Parag Patel

…was filed against him. After a trial, the district court found Schwarzbaum liable for willful FBAR penalties and issued a judgment for about $12 million in penalties plus late payment…

New Court Case Limits the Reasonable cause exception to FBAR penalties

- By : Parag Patel

…a Defense to FBAR Violations? The matter came before a federal judge to determine whether those penalties are appropriate. Non-willful FBAR penalties may not be levied if the taxpayer properly…

US Supreme Court to Rule on FBAR Penalties Case

- By : Parag Patel

…violations, which can trigger penalties of up to 50% of foreign account assets for each year of non-reporting. In his petition to the Supreme Court, Bittner said non-willful penalties arise…

New Court Ruling: FBAR penalties applied per form and not per account

- By : Parag Patel

…diminished penalties following a recent ruling from a federal trial court, where the taxpayer’s number of unreported accounts ranged from 41 to 51 for 4 different tax years. Facts: Alexandru…

Penalties for Form 5472 Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business

- By : Parag Patel

We would like to highlight a recent change in the IRS’ policy with respect assessing statutory late filing penalties related to certain international information forms. Of particular concern to international…

Large Penalties: Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations

- By : Parag Patel

…Foreign Corporations, is used to comply with the law and regulations. Penalties for not timely filing the Form 5471 are severe. I.R.C. § 6038(b)(1) provides for a monetary penalty of…

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

- By : Parag Patel

…greater. Willful violations may also be subject to criminal penalties. The statute of limitations on the assessment of FBAR penalties is 6 years from the due date of the FBAR….

New IRS practice unit: “Substantial compliance” doctrine, international information return penalties

- By : Parag Patel

The IRS Large Business and International (LB&I) division last week publicly released a “practice unit” that addresses what the term “substantially complete” means with reference to international information return penalties,…

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

- By : Parag Patel

…Delinquent Informational Return Submission Procedures (DIIRSP). The IRS nevertheless assessed penalties (25%) totaling $207,500 under IRC 6039F(c)(1). The case is similar to many of our clients’ situations where large penalties

New Form 3520 Penalties

- By : Parag Patel

In November 2020, the IRS changed the rules for assessing penalties for Form 3520, the Annual Return to Report Receipt of Foreign Gifts. Form 3520 is filed for any U.S….

Foreign Account Penalties Are Unfair

- By : Parag Patel

Our office is advising dozens of clients (including many HSBC customers) regarding offshore accounts, all of whom may be subject to large unfair penalties. Finally it appears that someone in…

Unfiled FBAR Penalties Survive Death

- By : Parag Patel

Do FBAR penalties survive death? According to a new court ruling, the answer is clearly yes (unfortunately). In United States v. Gill, 2021 U.S. Dist. LEXIS 12203 (S.D. Tex. 6/30/21),…

Opt Out of OVDI Program Penalties to Get a Lower Penalty

- By : Parag Patel

Under the 2011 Offshore Voluntary Disclosure Initiative (OVDI) or 2012 Offshore Voluntary Disclosure Program (OVDP), the 2012 program gives no discretion to the IRS agents to reduce penalties. If a…

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…

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…

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:…

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 Webinar: Resolving International Tax Compliance Disputes: FBAR Controversy, Penalties, Appeals, Form 3520/3520-A, Form 5471

- By : Parag Patel

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”…

Method to Cure Delinquent or Incomplete Foreign Information Returns Without Penalties

- By : Parag Patel

…failure to file certain international-related information returns. FAQ Nos. 17 and 18 address a number of significant reporting penalties related to undisclosed offshore financial accounts and undisclosed foreign assets. In…

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…

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…

Penalties for Not Filing Form 3520

- By : Parag Patel

…a Hearing under IRC 6320. Taxpayers who have incurred penalties for failure to file Form 3520 or late Form 3520 should contact Patel Law Offices. Over the years, our office…