Mitigating the Risk of Large FBAR and International Tax Claims

August 8, 2023

Mitigating the Risk of Large FBAR and International Tax Claims

August 8, 2023

Stay informed and vigilant: Rising severity of international tax filing claims poses new challenges for CPA firms.

The frequency and severity of malpractice claims related to tax services provided by CPA firms may be changing. Errors and omissions in international tax filings, specifically related to U.S. filing obligations for foreign activity, are leading to more severe claims. The penalties for non-compliance with international tax filing requirements can range from $10,000 to over $1,000,000. The severity of these claims is increasing because the IRS is assessing penalties more frequently and abating them less often. Common reasons for claims related to international tax filings include not identifying filing requirements, not asking enough questions to identify filing obligations, and forgetting to file or extend forms on time. Risk management recommendations include training to understand international filing requirements, using well-written engagement letters to define the scope of services, using organizers and checklists with comprehensive questions, and documenting discussions with clients. Recent court decisions may provide some penalty relief, but the IRS's response and the persistence of large penalties related to noncompliance are still a concern. For more information click the link!

https://www.journalofaccountancy.com/issues/2023/jul/mitigating-risk-of-large-fbar-and-international-tax-claims.html

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