News

September 5, 2022

IRS Waives Penalties for Some International and Late Returns

The IRS is offering pandemic-related relief for certain penalties, including those for international information returns (IIRs), with respect to tax returns for 2019 and 2020. The catch: The returns must be filed no later than this Sept. 30.
The IRS Notice “Penalty Relief for Certain Taxpayers Filing Returns for Taxable Years 2019 and 2020,” also provides relief from certain information return penalties regarding taxable year 2019 returns that were filed on or before Aug. 1, 2020, and taxable year 2020 returns that were filed on or before Aug. 1, 2021.
Plus penalties for certain late-filed returns for S corporations and partnerships that failed to report required information on 2019 and 2020 returns can be abated. Eligible penalties will be automatically waived or abated if they were previously assessed.
Aside from laying out the short window to take advantage of this relief, the IRS Notice does not specify when refunds will be issued.
The relief seems an unprecedented switch for the IRS, which has pursued late-filing penalties aggressively for required IIRs related to foreign corporations and foreign trusts and foreign-owned U.S. corporations. The agency often, for example, automatically issued penalties for late filings regardless of the taxpayer’s explanation or whether the taxpayer used one of the IRS’ programs to resolve the issue.
“The [following] penalties do not apply if the taxpayer can show that the failure to timely file the return or to furnish the required information or to provide the required notice, as applicable, is due to reasonable cause,” the new notice reads.
The abated penalties cover failure to file and inadequate information; “systematically assessed” penalties when a certain IIRs is attached to a late-filed U.S corporate return or U.S. partnership return; and penalties assessed by the IRS “campus assessment program” for the late filing of Forms 3520 and 3520-A.
The penalties specifically apply to:

• IRC Sec 6651(a)(1), failure to file;
• -Sec. 6038, failure to furnish certain information with respect to a controlled foreign corporation or a controlled foreign partnership;
• -Sec. 6038A(d), on a “25-percent foreign-owned” domestic corporation or wholly foreign-owned domestic disregarded entity for failure to furnish certain information or failure to maintain certain records;
• -Sec. 6038C(c), on a foreign corporation engaged in a U.S. trade or business for failure to furnish certain information or failure to maintain certain records;
• -Sec. 6039F(c), for failure to furnish certain information with respect to the receipt of large gifts or bequests from foreign persons;
• -Sec. 6677, for failure to file a notice or return required by Sec. 6048 with respect to transactions with, or ownership of, a foreign trust;
• -Sec. 6698(a)(1), for failure of any partnership to file the return required under Sec. 6031, and Sec. 6698(a)(2), for filing a return that fails to show the information required under Sec. 6031;
• -Sec. 6699(a)(1), for failure of any S corporation to file a return required under Sec. 6037, and Sec. 6699(a)(2), for filing a return that fails to show information required under Sec. 6037.
• -Sec. 6721(a)(2)(A), for failure to file an information return (as defined in section 6724(d)(1)) on or before the required filing date.

Penalty relief is unavailable in the case of a fraudulent return or when penalties are part of an accepted offer in compromise or a closing agreement, or where the penalties were determined by a court. Penalties not in the relief notice are ineligible. Also, not all international information forms seem to fall within this penalty abatement.
You may need to do nothing to qualify – or you may have to take specific affirmative steps between now and Sept. 30.

If you need our help before the deadline, contact us ASAP – the window of opportunity now closes in less than a month.

About the Author

Alicea Castellanos is the CEO and Founder of Global Taxes LLC. Alicea provides personalized U.S. tax advisory and compliance services to high-net-worth families and their advisors.

Alicea has more than 17 years of experience. Prior to forming Global Taxes, Alicea founded and oversaw operations at a boutique tax firm, worked at a prestigious global law firm and CPA firm.
Alicea specializes in U.S. tax planning and compliance for non-U.S. families with global wealth and asset protection structures which include non-U.S. trusts, estates and foundations that have a U.S. connection.

Alicea also specializes in foreign investment in U.S. real estate property, and other U.S. assets, pre-immigration tax planning, U.S. expatriation matters, U.S. persons in receipt of foreign gifts and inheritances, foreign accounts and assets compliance, offshore voluntary disclosures/tax amnesties, FATCA registration, and foreign companies wanting to do business in the U.S.

Alicea is fluent in Spanish and has a working knowledge of Portuguese.

Alicea is an active member of the Society of Trusts & Estates Practitioners (STEP), the New York State Society of Certified Public Accountants (NYSSCPAs), the American Institute of Certified Public Accountants (AICPA), the International Fiscal Association (IFA), a member of Clarkson Hyde Global, a world-wide association of accountants, auditors, tax specialists and business advisors and the International Advisory Experts (IAE).

Distinctly, in 2020, Alicea was awarded with a prestigious NYSSCPA Forty Under 40 Award. She was selected as someone that has notable skills and is visibly making a difference in the accounting profession. Alicea has also been recognized as a leading expert for Tax advice and she has been invited to join Advisory Excellence, as their exclusively recommended tax expert in the USA.

In 2021 and 2022, Alicea was the Gold and Silver Winner, respectively, of Citywealth's Powerwomen Awards in the category USA - Woman of the Year - Business Growth (Boutique). Furthermore, Alicea is currently listed in the Global Elite Directory 2022, which is an annual exclusive directory of the world's elite lawyers and outstanding wealth advisors advising ultra-high net-worth clients.

Please note: This content is intended for informational purposes only and is not a replacement for professional accounting or tax preparatory services. Consult your own accounting, tax, and legal professionals for advice related to your individual situation. Any copy or reproduction of our presentation is expressly prohibited. Any names or situations have been made up for illustrative purposes — any similarities found in real life are purely coincidental.

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March 24, 2022

NYC home listings surge, setting February record Sellers put 4,078 homes on the market, but inventory remains low

It’s been two years of unpredictability in the New York City market, but this data shows that the seasonality of the sales market is back,” Casey Roberts, a StreetEasy Home Trends Expert, said in a statement. A total of 16,622 New York City homes were for sale in February, 549 more than in January. Even with the record number of new listings, February inventory was 12 percent lower than it was in February last year, in part because buyers have been scooping up homes at a rapid rate. A total of 16,622 New York City homes were for sale in February, 549 more than in January. Even with the record number of new listings, February inventory was 12 percent lower than it was in February last year, in part because buyers have been scooping up homes at a rapid rate. Homes spent a median of 88 days on the market last month, four weeks faster than they did a year ago. Of the boroughs analyzed in the report, homes in Brooklyn moved off the market fastest: 79 days. Strong buyer demand usually means fewer price cuts. In February, 8 percent of New York City listings advertised a price cut — the same as last February, but lower than the 10 percent in February 2020, just prior to the pandemic. The median asking price for a home in New York City last month was $950,000, virtually unchanged from a year prior. This spring will be competitive for homebuyers, but the increase we’re seeing in new inventory is promising,” Roberts said in a statement. “The recent rise in home prices should motivate even more sellers to list their homes for sale, making it easier and more likely for buyers to find and win a home they love.”

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April, 2022

The costs of rentals of different cities.

The cost of monthly rent reached a new high in February, with the typical apartment now $283 more expensive each month than it was two years ago, before the onset of the pandemic. The national median rent was $1,792 last month, up 17% from a year ago, according to a report from Realtor.com. Rent for studio apartments, one bedrooms and two bedrooms all saw double-digit increases over the past year. February marked the seventh-straight month of rents soaring by double-digit percentages, after rents cratered in some of the biggest cities during the pandemic.
With rents up by nearly 20% over the past two years, rental prices are likely to remain high, but we do expect some cooling from the recent accelerated pace," said Danielle Hale, chief economist at Realtor.com.
In some cities, the rent increases have been staggering. Miami saw the fastest growth, with the median rental price spiking 55% in February from a year ago, making it the least affordable market of the top 50 cities, according to the report.
Cities that saw the smallest rent increases were Cleveland, Minneapolis and Detroit, where rents were up by just 6% or less in February from a year ago.
San Jose, California, remains the most expensive place to rent, with a median rent of $3,024 a month, followed by San Diego, Los Angeles, San Francisco, Miami and New York City. With rents surging nationwide, February data indicates that many renters' budgets may be stretched beyond the affordability limit," said Hale.

Sun Belt rents rising fastest.

The Sun Belt continues to attract new residents drawn by its relative affordability, attractive lifestyle and an increased ability to work remotely. As a result, all 10 of the fastest-growing rental markets are in the southern tier of the US, including four in Florida.
After Miami, the cities with the biggest annual rent jumps were Orlando and Tampa, Florida; Austin, Texas; San Diego; Las Vegas; Phoenix; Jacksonville, Florida; Memphis, Tennessee; and San Antonio, Texas -- all with rent surges of 23% or more.
Rent growth is being driven up by an increase in demand, particularly from young renters, many of whom may have been priced out of buying a home, according to the report.
Although buying a starter home is more affordable than renting one in a city like Miami, the report showed, home prices there are rising and mortgage rates are climbing, with purchase prices up 31.6% in February from a year ago.
In light of mounting economic uncertainties and the conflict in Ukraine, some households will prefer to buy, in an effort to lock in a largely fixed monthly payment as a hedge against further inflation," said Hale. "But fast-rising mortgage rates and still-limited numbers of homes for sale could mean some would-be buyers may stick with the flexibility of renting. With rental demand already outmatching supply, rental affordability will remain a challenge."

Rents taking a bigger share of income

A general rule of thumb is to keep monthly housing costs at 30% or less of monthly income. But even if wages are rising in some industries, rents are up a lot more -- and taking up a larger share of monthly income.
Sun Belt cities experiencing strong inbound migration are some of the least affordable places to rent, based on a Realtor.com analysis.
As the least affordable city to rent, Miami's median rent is $2,929 a month, which takes up nearly 60% of the median monthly income, making renters there heavily cost burdened.
The rental share of income was over 30% in 14 of the top 50 cities, including Los Angeles, where rent took up 46% of monthly income; followed by Riverside, California, at 45.9% and Tampa, Florida, at 44.7%.
Meanwhile, cities determined to be most affordable were places where rent was going up, but not eating up more than 30% of the median income. Kansas City was the most affordable city to rent, the analysis found. Although rent there jumped 11% in February from a year ago, the median rent of $1,216 a month ate up only 20% of the median income. Other affordable cities included Oklahoma City, Denver, St. Louis and Washington, DC.