Stanley Foodman

IRS issued Notice 2024-78 on 10/28/24 providing the extension of temporary relief for FATCA Model 1 Financial Institutions (FFI’s) regarding the...

On 9/19/24, the IRS issued a warning to taxpayers regarding OIC (Offer in Compromise) Mills that are taking advantage of taxpayers. OIC Mills promoters claim that their services are necessary to resolve taxpayer unpaid taxes owed to the IRS while charging excessive fees, often with no results. The promoters utilize aggressive marketing schemes that make false claims about settling tax debts with the IRS for pennies on the dollar with a limited time window through the OIC Program. The companies that run OIC Mills usually advertise through TV, radio, social media and “Robocalls” and make false promises to settle taxpayer debt at steep discounts while charging excessive fees for a service taxpayers could have obtained themselves directly from the IRS. OIC mills are scams that continue to appear on the IRS Annual Dirty Dozen List and put taxpayers and the tax professional community at risk of losing money, personal information, data and more. That said, it is important to note that an Offer in Compromise is a legitimate option offered by the IRS. Filing for an Offer in Compromise ought to be done with the assistance of a licensed and reputable tax professional as there is a process of evaluation and verification by the IRS, taking into consideration any special circumstances that may affect the taxpayer’s ability to pay. Submitting an Offer in Compromise with false information or making a false statement to the IRS are considered fraud and may be subject to civil or criminal penalties.

The IRS Whistleblower Program helps boost the “fair and effective enforcement of our nation’s tax laws and the success of our voluntary tax system.”...

On 10/29/24, FinCEN announced Beneficial Ownership Information (BOI) Reporting Relief to specific victims of Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine. BOI Reporting Relief consists of an extension of six months to submit beneficial ownership information reports, which may include updates and corrections to previously submitted reports. “FinCEN has issued five Notices extending the filing deadlines to for reporting companies that 1) have an original reporting deadline beginning one day before the date the specified disaster began and ending 90 days after that date, and 2) are located in an area that is designated both by the Federal Emergency Management Agency qualifying for individual or public assistance and by the Internal Revenue Service as eligible for tax filing relief”.

On 10/24/24, the National Taxpayer Advocate shared on its NTA Blog that the IRS has discontinued its policy of automatically imposing penalties for late submissions of Form 3520, which pertains to foreign gifts and inheritances reported in Part IV of the form. By the end of the year, the IRS plans to start evaluating “reasonable cause” statements for late Forms 3520 and 3520-A prior to applying penalties under IRC § 6677. This announcement was made by IRS Commissioner Danny Werfel during the UCLA Extension Tax Controversy Conference, as noted in the blog post. The NTA Blog states that: “By the end of the year the IRS will begin reviewing any reasonable cause statements taxpayers attach to late-filed Forms 3520 and 3520-A for the trust portion of the form before assessing any Internal Revenue Code (IRC) § 6677 penalty. This favorable change will reduce unwarranted assessments and relieve burden on taxpayers by giving them the opportunity to explain their situation before the IRS assesses a penalty.” That said, it is important to note that taxpayers ought to demonstrate that any noncompliance was due to reasonable cause rather than intentional neglect. It is essential for the Taxpayer to establish this reasonable cause from the beginning. This means that taxpayers need to work with a tax expert to ensure that the reasonable cause explanation is successful at the onset.

On 11/13/24, FinCEN issued an alert aimed at assisting financial institutions in recognizing fraudulent schemes linked to the utilization of deepfake...

On 10/9/24, the Bureau of Industry and Security (BIS) within the Department of Commerce has issued guidance aimed at financial institutions (FIs),...

updated two Beneficial Ownership Information Access FAQs. The theme of the 11/15/24 update is Beneficial Ownership Access in accordance with the Corporate Transparency Act. FinCEN had previously update the its FAQ Section on 4/18/24 when they added a new section titled “Access to BOI Information”

On 12/2/24, the IRS, along with its Security Summit partners, issued an IRS Consumer Alert and cautioned taxpayers to exercise heightened vigilance during their holiday shopping, as scammers are actively seeking personal information from potential victims. This IRS Consumer Alert marks the beginning of the ninth annual National Tax Security Awareness Week, which provides valuable tips for both taxpayers and tax professionals to help them avoid scams and safeguard their sensitive information. This initiative is part of the Security Summit, a collaborative effort involving the IRS, state agencies, the tax industry, tax professionals, software developers, payroll and tax financial product processors, and financial institutions. Total membership includes forty-two state agencies and twenty-four industry offices in addition to the IRS aimed at protecting taxpayers and the integrity of the tax system from identity theft.

On 11/4/24, the Internal Revenue Service issued a warning to taxpayers regarding the dangers of engaging with promoters of fraudulent tax schemes that involve donating ownership interests in closely held businesses, often referred to as “Charitable LLCs.” These schemes frequently target individuals with higher incomes and are classified as abusive transactions by the IRS. Typically, these schemes encourage higher-income taxpayers to establish limited liability companies (LLCs), contribute cash or other assets to these LLCs, and then donate a significant percentage of nonvoting, non-managing membership units to a charity. Meanwhile, the taxpayer retains control over the voting units and may reclaim the cash or assets for personal use, either directly or indirectly. In some cases, the promoter may have influence and or control over the charity receiving the donation. While it is permissible for taxpayers to deduct legitimate donations of closely held business interests, dishonest promoters may entice them into schemes that involve fraudulent charitable deductions.