Receiving an LT11 (or a Letter 1058) Final Notice of Intent to Levy from the IRS can be overwhelming, especially when it arrives unexpectedly. This notice is a critical warning that the IRS intends to levy your assets if the outstanding tax liability is not addressed promptly. A levy is the IRS’s legal authority to…
The Lamprecht case is a good reminder of how long and complex the path can be for international taxpayers to correct prior wrongs and come into compliance for federal income tax purposes. On April 23, 2024, in Lamprecht v Commissioner, ___ F.4th ___ (D.C. Cir. 4/23/24), ( D.C. Circuit Court opinion) the U.S. Court of…
Summary On Friday, May 3, 2024, the U.S. Circuit Court for the D.C. Circuit overturned the Tax Court’s decision in Farhy v. Commissioner, ___ F.4th ___ (D.C. Cir. 5/3/24) (link to opinion) and held that the IRS has authority under § 6038(b) to assess Form 5471 penalties. The Tax Court previously held that the…
The Mukhi v Commissioner[1] case is another example of just how severe the penalties are for failing to report certain foreign financial activity timely; in this case, it was the failure to report foreign trusts, related trust activity, and ownership of a foreign corporation on Form 3520, Form 3520-A, and Form 5471 in a timely…
The Fairbank case demonstrates the power of IRC § 6501(c)(8) to provide the IRS the ability to assess taxpayers many years after the normal statute of limitations is closed if the taxpayer fails to file all required IRS international information reporting forms. In Fairbank v Commissioner, T.C. Memo. 2023-19, the IRS argued that, despite the…
In Lamprecht v Commissioner, TC Memo 2022-91 (link to case), a John Doe summons tolled the statute of limitations and allowed the IRS to assess a 20% accuracy related penalty more than 6 years after the Taxpayers’ original income tax returns were filed. The IRS was able to assess the penalty even though the Taxpayer…
On Tuesday October 26, 2021, Judge Bloom for the District Court of the Northern District of Florida adopted a Magistrate’s recommendation to issue an order to compel repatriation of funds to satisfy a willful FBAR penalty and accrued interest of more than $18 million dollars.[1] The Magistrate’s Report and Recommendation was issued on June 30,…
On August 16, 2021, the IRS Director of Collection Policy issued a memorandum to provide guidance when FATCA[1] information should be used in IRS Collections cases. See SBSE-05-0821-0015 (the “Memo”) (available at the IRS website here: link). The new guidance from the Memo will be added to the Internal Revenue Manual effective August 16, 2021….
Overview A recent federal magistrate’s recommendation highlights a practical battle between the U.S. Government and a Defendant that is seeking to avoid payment of a $15+ million FBAR penalty: what happens if all of the defendant’s assets are outside of the United States? In a federal suit to reduce the FBAR penalty to judgement, the…
On Wednesday January 20, 2021, the Department of Treasury issued a memorandum[1] (the “Memo”) implementing temporary measures with respect to levy procedures to avoid levying bank accounts with funds from the second round of Economic Impact Payments.[2] The second round of economic impact payments (“EIP 2”) is generally $600 for individuals and $1,200 for married…
