Houston Probate Attorney Blog

Blog Authors

Latest from Houston Probate Attorney Blog

Following a string of other similar decisions, the Ninth Court Court of Appeals in United States v. Boyd finds that the non-willful FBAR penalty is assessed by form and not by account. In doing so, it reversed the lower court’s decision. This ruling is especially significant because it is the first appellate court to examine this issue. Background of the case Taxpayer, an American citizen, had a financial interest in fourteen financial accounts in the United Kingdom with an aggregate balance in excess of $10,000. The amounts in these accounts significantly increased between 2009 and 2011 after her father died…
In at least the second such instance that we’re aware of, the Government has brought charges related to filing a false streamlined submission, among other things. Excerpt below from the DOJ press release: A federal grand jury in Alexandria, Virginia, returned an indictment on March 3, 2021, charging a Virginia man with failing to file Reports of Foreign Bank and Financial Accounts (FBARs) and filing false documents with the IRS. According to the indictment, Azizur Rahman of Herndon, had a financial interest in and signature authority over more than 20 foreign financial accounts, including accounts held in Switzerland, the United…
After a district court in Texas recently held that penalties for the non-willful failure to file an FBAR is be assessed by form (and not by the number accounts), the District Court of Connecticut came to a similar decision in United States v. Zvi Kaufman No. 3:18-cv-00787. This will be welcome news by taxpayers who may be appealing or litigating non-willful FBAR penalties. Facts Taxpayer resided in Israel for 40 years and opened bank accounts in Israel. He late filed his FBARs for tax periods 2008, 2009, and 2010. The Internal Revenue Service then assessed penalties against the taxpayer for…
The IRS Small Business & Self-Employed Division updated guidance (SBSE-04-1120-0074) for foreign bank account report compliance activity due to the COVID-19 pandemic. A text of the document appears below: This memorandum issues updated guidance for Report of Foreign Bank and Financial Accounts (FBAR) compliance activity in the ongoing COVID-19 environment. Please ensure this information is distributed to all affected employees within your organization Purpose: It remains vitally important for employees to be sensitive to the individual circumstances of filers1 and provide appropriate administrative actions commensurate with the situation. This memorandum provides updated guidance to address unique operational circumstances of the…
In a recent case before the U.S. Court of Federal Claims, two married taxpayers appeared pro se in challenging the assessment of passive foreign investment company (PFIC) income taxes.  David C. Shnier et ux. v. United States; No. 1:18-cv-01257 Taxpayers offered up an unusual interpretation of the PFIC statute and a new method for statutory interpretation. Facts In the 1960s, Taxpayer’s father and four uncles created family trusts to share ownership of their jointly owned Canadian floorcovering company. The Canadian company later became six holding companies. Five belonged to each of the uncles. One holding company, Enshnierco, belonged to the…
The IRS recently announced an LB&I campaign that targets nonresidents who own U.S. rental properties. Based on past experience, IRS campaigns should be taken seriously. The IRS will prioritize and act on them. “Practice Area: Withholding and International Individual Compliance Lead Executive: Deborah Palacheck, Director of Withholding & International Individual Compliance Campaign Point of Contact: Ursula Gee Nonresident aliens who receive rental income from U.S. real property must comply with all tax reporting and filing requirements. This campaign will address noncompliance through examinations, education, and outreach.” What is a non-resident? For U.S. tax purposes, a non-resident is a person that…
We had written about the Bittner case before. The IRS had sought to reduce to judgment about $3M of non-willful FBAR penalties, which had been assessed per account. The taxpayer countered that non-willful FBAR penalties should have been assessed per form, not per account. Recently, in a matter of first impression in the 5th Circuit, the district court of the Eastern District of Texas ruled in favor the taxpayer on this issue. In deciding for the taxpayer, the Bittner court broke from decisions made in Boyd, which of course this court was not required to follow. Court’s Analysis Here…
This week the IRS announced a new Section 965 compliance campaign in it’s LB&I division. While U.S. corporations have owed the vast majority Section 965 transition taxes, this compliance campaign focuses on individual returns — i.e., Form 1040 filers who are required to file Form 5471. “Pursuant to the changes to IRC §965 under the Tax Cuts and Jobs Act, U.S. shareholders, including individuals, that directly or indirectly own at least 10% of the stock of a specified foreign corporation (SFC) are required to include in gross income their share of the SFC’s accumulated post-1986 deferred foreign income for the…
In United States v. Isac Schwarzbaum, No. 9:18-cv-81147, the U.S. District Court of the Southern District of Florida found the taxpayer liable for nearly $13M in penalties for his willful failure to file FBARs for 2007 through 2009. As usual with high-dollar FBAR penalty cases, it involves unreported Swiss accounts; nothing surprising there. More notably, the Court completely rejected the taxpayer’s Eight Amendment argument, finding that the Eight Amendment does not ever apply to FBAR penalties. Sure it’s cruel, but cruel and unusual? “Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.” –…
In early March 2020, the IRS released Rev. Proc. 2020-17 which provides an exemption from the information reporting requirements under IRC § 6048 – specifically, the filing of Forms 3520 and 3520-A. In addition, it provides tax relief for taxpayers who’ve been assessed penalties under IRC § 6677 for failure to file these forms. Exemptions from Form 3520 and Form 3520-A Section 6048 requires annual information reporting of a United States person’s transfers of money or other property to, ownership of, and distributions from, foreign trusts, and section 6677 imposes penalties on United States persons for failing to comply with…