Leaderboard

There really isn't any liability... until there is.

In my annual cover letter with the engagement letter, I include a full paragraph U.S. citizens and residents have an obligation to disclose a financial interest in any foreign bank accounts. Title 31, Section 103.24 of the Code of Federal Regulations (“CFR”), 31 CFT 103.24, applies to any person or entity subject to the jurisdiction of the U.S., having a financial interest in, or signature authority over, a bank, securities or other financial account having a value exceeding $10,000 (at any time) in a foreign country. The Foreign Bank Account Reporting (FBAR) is now done with FinCEN Report 114, Report of Foreign Bank and Financial Accounts and is only available online through the Bank Secrecy Act E-Filing website, (http://bsaefiling.fincen.treas.gov/main.html). Please see this website for full details. NOTE: This is now due April 15. There are substantial civil and criminal penalties prescribed for failure to file. The civil penalty can be as much as $10,000, regardless of whether the violation is willful. Criminal penalties are much more severe. Please consider the dollar value of any foreign accounts carefully. Please call with questions. I do not and will not prepare myself. All the information the client needs is, I think, shown here. It's enough for me to manage the usual things!

On a positive note, you get to bill them for two part-year returns, which should end up being about 3x your normal bill. If you're using ATX, you'll want to do a short year rollover in the 2020 software, after you've done the old partnership final short year. You do this on the month/quarter tab of the 2020 rollover screen. This will rollover all of your assets with the proper beginning accumulated depreciation, and it will calculate the correct short year depreciation for the new LLC's first short year. Make sure you enter fiscal year dates in the old 1065. Now here's where you get to be a hero. There will be late filing fees for the old 1065, but you can get them automatically removed either under first time forgiveness or by using this: Partnership Late Filing Penalty Relief Please remove the penalty for late filing of a partnership return under Rev. Proc. 84-35 and code section 6698(a). The partnership is a domestic partnership with 10 or fewer partners, each partner is a natural person or an estate, each partner’s share of each partnership item is the same as such partner’s share of every other item, the partnership has not elected to be subject to the consolidated audit procedures under IRC 6221 through IRC 6233, and all partners reported their share of all pass through items on timely filed individual returns.

Once she wrote "some strange kind of pension" I was pulling away!

I do a couple but they are relatively straightforward expats (one from Canada, and one from Jamaica) who provide all the information and i just enter it on the form for them. If it was anything other than bank accounts, I am not interested in spending that much time on something I will do that seldom.

On top of all those unpleasantries for you, isn't there an additional KY filing requirement and fees (of course) for LLC's? I used to have a dog trainer that was an LLC and she was surprised about the additional filing. I don't know if p'ships are different. With all her activities in so many taxing jurisdictions in KY and OH, I finally 'invited' her to find another preparer more familiar with KY. She was really nice but I could never charge enough to cover all the time on her taxes. Make sure you charge enough to cover all the time you will need to address this mess. Clients need to understand the consequences of their actions. We keep trying to drill into them to ask first but it doesn't always sink in.

I'm adding a line item for The CARES Act and another line for the Consolidated Appropriations Act. How much I put on those lines will depend on how much time I spend on that client's questions, issues, etc., and whether or not they asked questions BEFORE they did things like take money out of their IRA. Yes, this is my way of increasing my total fee for almost every client.

grumble mumble......grumble mumble.....

ATX never provides the 1040-ES until late march or so. As to my recollection. But then again my memory is like memorex. OLD.

Not touching the FBAR and do as Lynn and John described above.

I never touch FBAR. Too much liability at stake. I document that I advised them of the filing requirement & penalties and leave it at that. If someone tried to insist that I file it, I would view that as a deal breaker.

When the TDF form was filed It was a mixed bag. That changed when the FBAR filing is allowed only on the FINCEN site . I provide general FBAR filing requirements but do not want the liability of doing so. My 3 individual clients with foreign assets all file their own FBAR and provide a copy to me. The FBAR for a US trust is filed by the trustee, who also provides a copy to me.

Since you have to use 2019 on both EIC and child credits if higher, be careful because you have to manually select both. on Sch EIC Step 5, 2 you have to check the box. Then go to Sch 8812, 6a and manually enter the 2019 amount. If someone is doing the way I am doing it, let us know. If doing it different, please share.

Client just emailed that she and half the other physicians in that practice had false claims filed under their names. I am sending her info to get an ID Pin. She states that the ID theft group they work with says she should also file an affidavit with IRS. I would say of course, to follow the recommendation. Has this happened to any of your clients? How did you/they respond? I've had only one other client with ID theft which was from credit card at a store.

I have a client who has for many years been a general partnership with two partners filing a Form 1065 for rental real estate activity. This year, without consulting me, they decided to form a limited liability company and filed all the appropriate paperwork with the Kentucky Secretary of State. The entity is still be taxed as a partnership so technically nothing changed from a tax perspective except the name which went from "BW Associates" to "B&W, LLC." As I understand it, I would simply have needed to check the "name change" box on the 2020 return and continue on my merry way. Problem is, however, that they applied for and received a new Federal ID number for the LLC. Because of this, do I need to file a part year return for BW Associates and a part year return for B&W LLC, or can I continue using the old EIN and try to explain to the IRS should they ever question why a return was never filed under the new number issued to the LLC? To further complicate matters, they never completed the registration process with the state of Kentucky and as a result have no ID number for filing the state return for the LLC. Why do people do things without asking questions first?!? Ugh.

Taxable. https://www.irs.gov/newsroom/irs-unemployment-compensation-is-taxable-have-tax-withheld-now-and-avoid-a-tax-time-surprise Your state may vary.

That's why I state to call with questions. The first and only one I did was with a German client sitting with me. I typed in the information for him but it was his account and he had all the numbers. He was about 80 and not so great on the computer at the time. All the others now are all quite computer literate and are all professors of something. They can manage. Most of my other clients, yeah, could not, but they also do not have foreign accounts so no worries.

Feel free and to edit, too. I probably got the gist from AICPA and instructions. Anyway, it has worked and my clients that need to do this now also even let me know that they have filed. I use the Questionnaire in ATX and one section is Foreign Reporting. I require a completed questionnaire to prepare returns so the onus is on the client. If those questions are answered in the affirmative and they don't let me know they've filed, I ask and remind them of the requirements. Somehow I've managed to gain several German clients (citizens now, green cards, other) and US expats in Australia (now dual citizens) so try to keep on top of this.

Guess I did the right thing. I sent this link https://www.irs.gov/individuals/how-irs-id-theft-victim-assistance-works and forwarded the IRS Tax Tip 2021-07 both of which describe how and why to get the IP PIN and the links. I will look at the pub, too, and probably forward it. I think, as a physician's practice and having an ID theft group working with them, she is in good hands already. It's always something, isn't it?

As a practitioner I would go further and give my client a copy of the IRS Identity Theft Guidelines because what our clients need to do more than just get a pin: https://www.irs.gov/pub/irs-pdf/p5027.pdf I would also give them this link to the FTC's Identity Theft Resources: https://www.consumer.ftc.gov/features/feature-0014-identity-theft

Agree. Give it a try. It was your clients (unpaid) preparer who had an illness/death in the family that didn't e-file a completed return plus your client's advanced age/any health issues/any cognitive issues preventing your client from checking on e-filing.

Yeah, I heard the scream of Liability as soon as I received her email. I have about three clients that I remind and check up on their FBAR requirements, but all file themselves. In fact, one decided that their Singapore bank account wasn't needed with their US TDBank account with online bill paying and a credit card, so she closed it years ago and filed her last FBAR the following year. I have enough to do to keep up with the IRS/Congress enacting tax laws. And, I do take CE in international issues, previously scheduled a webinar for next week re FBARS because I do have to advise my clients. Thank you, everyone, for sharing your thoughts. I'm leaning toward declining this client.

I only do a few but I never considered any liability in doing so.

The IRS disagrees: https://www.irs.gov/coronavirus/second-eip-faqs#Eligibility If you died BEFORE 1/1/20 you don't get it.

I think it's worth trying to abate. Cancer and subsequent death of a spouse could, I think, put just about everything else on the back burner. Worst case is denial and penalty maybe covered by that state deduction not previously taken.

The IRS letter is easily satisfied with a letter stating the trust had no income in the years cited. I've had the same letter come when a person died demanding 1041s for six years. In this case it was a grantor trust and reported on the individual returns for those years, satisfied by a letter and some back up docs showing income docs in the deceased's own Soc Sec number. In your case, since the interest is reported to the trust, you will have to file the 1041 with just the statement pushing the income to the surviving spouse. While you're into the situation, document the step-up basis of that real estate for future transactions. If it's jointly owned, half of it gets step up.

Thank you!

Finally received the docs. One paragraph states that a "Irrevocable Trust is created by this instrument" and that "during their lifetime trustee shall pay to grantors all the net income from the trust.". Next paragraph states that upon death of surviving grantor the trust will terminate and the children will receive the principal and any undistributed income. But then the next paragraph states that grantor "shall have limited power to to appoint the remainder of the trust to any other person or charitable organization...exercising such power by the surviving Grantors Last Will and Testament". So it looks like this is a "intentionally defective" irrevocable trust as mentioned by Sara and the 1041 needs to be filed, with the K-1 to the mother. The 1099 INT is issued with the trusts EIN. And to add to the confusion, the trustee received a letter from the IRS yesterday looking for 1041's back to 2017, when the trust was created. So my next question for this very knowledgeable group is why is the IRS looking for returns if there was no income reported? I'm fairly confident there was no income since the only asset in the trust up to the father's death in 2020, is non-rental real estate. Thanks for all the replies and educating me on this subject.