Third Quarter 2025 IRS Interest Rates on Overpayment & Underpayment of Tax

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On May 12, 2025, the IRS announced that the Third Quarter 2025 IRS interest rates on overpayment and underpayment of tax will remain the same as in the Second Quarter of 2025.

This means that the Third Quarter 2025 IRS interest rates will be as follows:

seven (7) percent for overpayments (seven (7) percent in the case of a corporation);

seven (7) percent for underpayments;

nine (9) percent for large corporate underpayments; and

four and a half (4.5) percent for the portion of corporate overpayment exceeding $10,000.

How the IRS Calculated Third Quarter 2025 IRS Interest Rates

The IRS calculates the IRS interest rates based on specific tax provisions. We begin with the Internal Revenue Code (“IRC”) §6621, which establishes the IRS interest rates on overpayments and underpayments of tax. Under §6621(a)(1), the overpayment rate is the sum of the federal short-term rate plus 3 percentage points for individuals and 2 percentage points in cases of a corporation. There is an exception to this rule: with respect to a corporate overpayment of tax exceeding $10,000 for a taxable period of time, the rate is the sum of the federal short-term rate plus one-half of a percentage point.

Additionally, under §6621(a)(2), the underpayment rate is the sum of the federal short-term rate plus 3 percentage points. Similarly to overpayments, there is an exception for a large corporate underpayment: in such cases, §6621(c) requires the underpayment rate to be the sum of the relevant federal short-term rate plus 5 percentage points. Also, the readers should see §6621(c) and §301.6621-3 of the Regulations on Procedure and Administration for the definition of a large corporate underpayment and for the rules for determining the applicable date.

Finally, pursuant to the IRC §6621(b)(1), the IRS computed the Third Quarter 2025 IRS interest rates based on federal short-term rates in April of 2025.

Importance of the Third Quarter 2025 IRS Interest Rates

The IRS interest rates are relevant for a great variety of purposes. Let’s highlight three of its most important uses. Firstly, these rates will determine the interest a taxpayer will get on any IRS refunds.

Second, the IRS and the taxpayers use these rates to calculate the interest on any additional US tax liability on amended or audited tax returns. This also applies to the amended (and, in case of SFOP, original) tax returns that the taxpayers submit pursuant to Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures.

Finally, the Third Quarter 2025 IRS interest rates will be used to calculate PFIC interest on any relevant §1291 PFIC tax. This PFIC interest will be reported on the relevant Form 8621 and ultimately Form 1040.

We at Sherayzen Law Office constantly deal with the IRS interest rates on overpayments and underpayments of tax. This is why we closely follow any changes in these IRS interest rates, including the Third Quarter 2025 IRS interest rates.

Sherayzen Law Office Successfully Completes Its 2025 Spring Tax Season

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On April 15, 2025, Sherayzen Law Office, Ltd., successfully completed its 2025 Spring Tax Season. It was a challenging and interesting tax season. Let’s discuss it in more detail.

2025 Spring Tax Season: Sherayzen Law Office’s Annual Compliance Clients

Annual tax compliance is one of the major services offered by Sherayzen Law Office to its clients. The majority of our annual compliance clients are individuals and businesses who earlier retained our firm to help them with their offshore voluntary disclosures. They liked the quality of our services so much that they preferred our firm above all others to ensure that they stay in full compliance with US tax laws.

It is natural that this group of clients is the largest among all other groups, because the unique specialty of our firm is conducting offshore voluntary disclosures.

A smaller group of our annual compliance clients consists of tax planning clients who also asked Sherayzen Law Office to do their annual compliance for them. While the group is smaller, it is usually the one always has a complex set of US tax compliance requirements due to the size of each client.

Finally, the last group of our annual compliance clients consists of businesses and individuals who were referred to our firm specifically for help with their annual compliance. These are usually foreign businesses who just expanded to the United States and foreign executives and professionals who just arrived to the United States to start working here. An important part of this group also includes foreign students.

2025 Spring Tax Season: Sherayzen Law Office’s Annual Compliance Services

Virtually all of our clients have exposure to foreign assets and international transactions. Hence, in addition to their domestic US tax compliance, Sherayzen Law Office prepares the full array of US international tax compliance forms related to foreign accounts (FBAR and Form 8938), PFIC calculations (Forms 8621), foreign business ownership and Section 367 notices (Forms 926, 5471, 8858, 8865, et cetera), foreign trusts (Form 3520 and Form 3520-A), foreign gifts/foreign inheritance (Form 3520), foreign ownership of US businesses (Form 5472) and other relevant US international tax compliance issues.

2025 Spring Tax Season: Unique Challenges and Opportunities

The 2025 Spring Tax Season was especially challenging because of the record number of deadlines that Sherayzen Law Office had to complete. During the season, Sherayzen Law Office filed a large number of FBARs, US income tax returns and US international tax returns such as Forms 3520, 5471, 8865, 8621 and 926.  Despite a very large number of deadlines that we timely finished prior to April 15, due to the international nature of our cases, Sherayzen Law Office extended ever more deadlines.

This year we also implemented on a grander scale new spreadsheets for clients, including the 3.2 version of Account Summary and 3.1 version of Summary of Entities. We also replaced the older versions of the Schedule C and Schedule E spreadsheets with the new 2025 versions. We hope to complete the process of firm-wide usage of updated spreadsheets by the end of the fall tax season.

Looking Forward to Completing Offshore Voluntary Disclosures, Additional Tax Planning and 2025 Fall Tax Season

Having completed such a challenging 2025 Spring Tax Season, Sherayzen Law Office now looks forward to completing our outstanding offshore voluntary disclosures and IRS audits.  During the Spring of 2025, we also expanded our portfolio of international tax planning clients. Finally, we will be working on completing the extensions prior to the October 15th, 2025 deadline.

Contact Sherayzen Law Office for Professional Help with US International Tax Law, including Offshore Voluntary Disclosures

If you have foreign assets or foreign income, contact Sherayzen Law Office for professional help. Our firm specializes in US international tax compliance. We have helped hundreds of US taxpayers to bring themselves into full compliance with US tax laws, and We Can Help You! Contact Us Today to Schedule Your Confidential Consultation!

2025 FBAR Civil Penalties | FBAR International Tax Lawyer & Attorney

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This article is an update of the prior articles on the FBAR Civil Penalties. Since the US Congress mandated the IRS to adjust FBAR civil penalties for inflation on an annual basis, this article discusses the year 2025 FBAR Civil Penalties.

2025 FBAR Civil Penalties: Overview of the FBAR Penalty System

FinCEN Form 114, the Report of Foreign Bank and Financial Accounts (commonly known as “FBAR”), has always had a very complex, multi-layered system of penalties, which has grown even more complicated over the years. There are four categories of FBAR penalties: criminal, willful, non-willful and negligent.

Of course, the most dreaded penalties are FBAR criminal penalties. Not only is there a criminal fine of up to $500,000, but, in some case, a person can be sentenced to 10 years in prison for FBAR violations (and these two criminal penalties can be imposed simultaneously). Since the focus of this article is on FBAR civil penalties.

The next category of penalties are FBAR civil penalties are for a willful failure to file an FBAR. The IRS imposes these penalties in a very harsh manner per each violation – i.e. on each account per year, potentially going back six years (the FBAR statute of limitations is six years).

The third category of penalties apply to a non-willful failure to file an FBAR or a filing of an incorrect FBAR. This means that the IRS can impose these penalties on US persons who do not even know that FBAR exists.

Finally, with respect to business entities, the IRS can assess a penalty for a negligent failure to file an FBAR or a filing of an incorrect FBAR.

It is important to note that FBAR has its own reasonable cause exception. The Reasonable Cause Exception can a very important tool for fighting the assessment of any of the aforementioned civil penalties. Moreover, each of these penalty categories has numerous levels of penalty mitigation that a tax attorney may utilize to lower his client’s FBAR civil penalties.

2025 FBAR Civil Penalties: Penalties Prior to November 2 2015

Prior to November 2, 2015, the US government never adjusted FBAR penalties for inflation. Rather, the penalties stayed flat at the same levels as the Congress originally mandated them. Let’s go over each category of penalties prior to inflation adjustment.

As of November 1, 2015, Willful FBAR penalties were up to $100,000 or 50% of the highest balance of an account, whichever is greater, per violation. Again, a violation meant a failure to correctly report an account in any year. Non-willful FBAR penalties were up to $10,000 per violation per year; per US Supreme Court’s decision last year, the penalty should have been imposed on a per form (not per account) basis. Finally, FBAR penalties for negligence were up to $500 per violation; if, however, there was a pattern of negligence, the negligence penalties could increase ten times up to $50,000 per violation.

2025 FBAR Civil Penalties: Inflation Adjustment

The situation changed dramatically in 2015. As a result of the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (“2015 Inflation Adjustment Act”), Congress mandated federal agents to: (1) adjust the amounts of civil monetary penalties with an initial “catch-up” adjustment; and (2) make subsequent annual adjustments for inflation. The inflation adjustment applied only to civil penalties.

The “catch-up” adjustment meant a huge increase in penalties, because the Congress now required federal agencies to update all of these penalties from the time of their enactment (or the last year the Congress adjusted the penalties) through November of 2015. This meant that, in 2015, the penalties jumped to account for all accumulated multi-year inflation. The Congress only gave one limitation this increase: the catch-up adjustment could not exceed to two and a half times of the original penalty.

Fortunately, Congress adjusted FBAR penalties in 2004 and the “catch-up” adjustment did not have to go back to the 1970s. It still meant a very large (about 25%) increase in FBAR civil penalties, but it was not as dramatic as some other federal penalties.

2025 FBAR Civil Penalties: Bifurcation of FBAR Penalty System

The biggest problem with the inflation adjustment, however, was the fact that it further complicated the already dense multi-layered FBAR system of civil penalties – FBAR penalties became dependent on the timing of a violation and IRS penalty assessment. In essence, the 2015 Inflation Adjustment Act split the FBAR penalty into two distinct parts.

The first part applies to FBAR violations that occurred on or before November 2, 2015. The old pre-2015 FBAR penalties described above applies to these violations irrespective of when the IRS actually assesses the penalties for these violations. The last FBAR violations definitely eligible for the old statutory penalties are those that were made concerning 2014 FBAR which was due on June 30, 2015. The statute of limitations for the 2014 FBAR ran out on June 30, 2021.

The second part applies to all FBAR violations that occurred after November 2, 2015. For all of these violations, the exact amount of penalties will depend on the timing of the IRS penalty assessment, not when the FBAR violation actually occurred. In other words, if an FBAR violation occurred on October 15, 2017 and the IRS assessed FBAR penalties June 17, 2021, the IRS would use the inflation-adjusted FBAR penalties as of the year 2021, not October 15, 2017.

2025 FBAR Civil Penalties: Penalties Assessed On or After January 17, 2025

Now that we understand the history of FBAR penalties, we can specifically discuss the 2025 FBAR Civil penalties. The first thing to understand is that we are talking about penalties assessed by the IRS on or after January 17, 2025; prior to that date, the 2024 FBAR civil penalties were still effective.

The 2025 Willful FBAR penalty imposed under 31 U.S.C. §5321(a)(5)(C)(i)(I) is $165,353 per violation. Per last year’s court decisions, the term “violation” in the context of willful FBAR penalties means on a “per account for each year” basis described above.

The 2025 Non-Willful FBAR penalty imposed under 31 U.S.C. §5321(a)(5)(B) is $16,536 per violation. The term “violation” in the context of non-willful FBAR penalties at this point has been settled to mean “per form” (rather than per-account) basis.

The 2025 Negligence FBAR penalty imposed under 31 U.S.C. §5321(a)(6)(A) is $1,430; if there is a pattern of negligence under 31 U.S.C. §5321(a)(6)(B), then the penalty goes up to $111,308.

Contact Sherayzen Law Office for Professional Help With Your Prior FBAR Noncompliance

Sherayzen Law Office is a leader in US international tax law and FBAR compliance. We have successfully helped hundreds of clients from over eighty countries resolve their prior FBAR noncompliance, including through various voluntary disclosure programs (such as Streamlined Domestic Offshore Procedures, Streamlined Foreign Offshore Procedures, Delinquent FBAR Submission Procedures, et cetera). We can help you! Contact Us Today to Schedule Your Confidential Consultation!

West Virginia IRS Tax Relief: November 3 2025 Deadline | Tax Lawyer News

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On March 14, 2025, the Internal Revenue Service announced a tax relief for individuals and businesses in parts of West Virginia affected by severe storms, straight-line winds, flooding, landslides and mudslides that began on February 15, 2025. On March 20, 2025, the tax relief expanded to four more counties. Let’s discuss this West Virginia IRS tax relief in more detail.

West Virginia IRS Tax Relief: Who is Affected

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, individuals and households that reside or have a business in Greenbrier, Lincoln, Logan, McDowell, Mercer, Mingo, Monroe, Summers, Wayne and Wyoming counties qualify for tax relief.

The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

West Virginia IRS Tax Relief: New Tax Deadline for Affected Counties

All taxpayers who reside in the aforementioned countries (as updated later by the IRS) will now have until November 3, 2025, to file various federal individual and business tax returns and make tax payments.

West Virginia IRS Tax Relief: What Tax Deadlines are Postponed by the IRS

The tax relief postpones various tax filing and payment deadlines that occurred from February 15, 2025, through November 3, 2025 (“postponement period”). As a result, affected individuals and businesses will have until November 3, 2025, to file returns and pay any taxes that were originally due during this period.

Here is a non-exclusive list:

  • Individual income tax returns and payments normally due on April 15, 2025.
  • 2024 contributions to IRAs and health savings accounts for eligible taxpayers.
  • Quarterly estimated tax payments normally due on April 15, June 16 and September 15, 2025.
  • Quarterly payroll and excise tax returns normally due on April 30, July 31 and October 31, 2025.
  • Calendar-year partnership and S corporation returns normally due on March 17, 2025.
  • Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
  • Calendar-year tax-exempt organization returns normally due on May 15, 2025.

West Virginia IRS Tax Relief: Additional Penalty Abatement

In addition, penalties for failing to make payroll and excise tax deposits due on or after February 15, 2025, and before March 3, 2025, will be abated as long as the deposits were made by March 3, 2025.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

West Virginia IRS Tax Relief: Tax Relief is Automatic

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the IRS Special Services toll-free number at 866-562-5227 to update their address and request disaster tax relief.

Moreover, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. In such cases, taxpayers qualifying for relief who live outside the disaster area need to contact the IRS Special Services toll-free number at 866-562-5227. Of course, this also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the bulk requests from practitioners for disaster relief option, described on IRS.gov.

West Virginia IRS Tax Relief: Additional Tax Relief

So, when should the taxpayers claim their losses disaster? Actually, there is a choice. Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2025 return normally filed next year), or the return for the prior year (2024). Also, taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. For individual taxpayers, this means October 15, 2026. Be sure to write the FEMA declaration number – 4861-DR − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

West Virginia IRS Tax Relief: Taxation of Qualified Disaster Relief Payments

The IRS generally allows to exclude qualified disaster relief payments from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents.

West Virginia IRS Tax Relief: Impact on Offshore Voluntary Disclosures

Sherayzen Law Office tracks carefully the IRS announcements of tax relief because they may affect the schedule of an offshore voluntary disclosure.  There are many reasons for it. For example, some taxpayers simply may not have the ability to tackle the document collection tasks for a while, others may benefit from the tax deadline postponement which would allow the voluntary disclosure to proceed before making any current-year tax compliance filings.

Naples FBAR Attorney | International Tax Lawyer Florida

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If you reside in Naples, Florida and have unreported foreign bank and financial accounts, you may be looking for a Naples FBAR Attorney.  In this case, you should contact Sherayzen Law Office, Ltd., a leader in FBAR compliance, including offshore voluntary disclosures concerning delinquent FBARs. Let’s explore the main reasons for it.

Naples FBAR Attorney is an International Tax Lawyer

From the outset, it is very important to understand that, by looking for Naples FBAR attorney, in reality, you are searching for an international tax lawyer who specializes in FBAR compliance.

The reason for this conclusion is the fact that FBAR enforcement belongs to a very special field of US tax law – US international tax law. FBAR is an information return concerning foreign assets, which necessarily involves US international tax compliance concerning foreign assets/foreign income. Moreover, ever since the FBAR enforcement was turned over to the IRS in 2001, the term FBAR attorney applies almost exclusively to tax attorneys.

Hence, when you search for an FBAR attorney, you are looking for an international tax attorney with a specialty in FBAR compliance.

Naples FBAR Attorney: Deep Knowledge of US International Tax Law and Offshore Voluntary Disclosures

When retaining Naples FBAR attorney, consider the fact that such an attorney’s work is not limited only to the preparation and filing of FBARs. Rather, the attorney should be able to deliver a variety of tax services and freely operate with experience and knowledge in all relevant areas of US international tax law, including the various offshore voluntary disclosure options concerning delinquent FBARs.

Moreover, as part of an offshore voluntary disclosure, an FBAR Attorney often needs to amend US tax returns, properly prepare foreign financial statements according to US GAAP, correctly calculate PFICs, and complete an innumerable number of other tasks.

Mr. Sherayzen and his team of motivated experienced tax professionals of Sherayzen Law Office have helped hundreds of US taxpayers worldwide to bring their tax affairs into full compliance with US tax laws. This work included the preparation and filing of offshore voluntary disclosures concerning delinquent FBARs. Sherayzen Law Office offers help with all kinds of offshore voluntary disclosure options, including: SDOP (Streamlined Domestic Offshore Procedures), SFOP (Streamlined Foreign Offshore Procedures), DFSP (Delinquent FBAR Submission Procedures), DIIRSP (Delinquent International Information Return Submission Procedures), IRS VDP (IRS Voluntary Disclosure Practice) and Reasonable Cause disclosures.

Naples FBAR Attorney: Out-Of-State International Tax Lawyer

Whenever you are looking for an attorney who specializes in US international tax law (which is a federal area of law, not a state one), you do not need to limit yourself to lawyers who reside in Naples, Florida. On the contrary, consider international tax attorneys who reside in other states and help Naples residents with their FBAR compliance.  The most important consideration is developing the trust in your attorney’s knowledge, professionalism and ability to resolve your FBAR compliance issues. Remember that US international tax law (including FBAR compliance) is federal law.  Hence, the resident of your international tax attorney is not important.

Contact Sherayzen Law Office for Professional FBAR Help

Sherayzen Law Office is an international tax law firm that specializes in US international tax compliance, including FBARs. While our office is in Minneapolis, Minnesota, we help taxpayers who reside throughout the United States, including Naples, Florida. Thus, if you are looking for a Naples FBAR Attorney, contact Mr. Sherayzen as soon as possible to schedule Your Confidential Consultation!