Ask Tim: My Father Sent $100,000 to an Indonesia Consulate. Cnan We Get the Money Back?

When I was a kid, April Fools’ Day felt like a real event. A little harmless chaos, a few bad jokes, maybe some plastic wrap where it did very little good. Back then, the prank usually ended by lunch and everybody moved on. These days, April has a different way of getting your attention. A tax notice shows up, or your accountant says something that makes you read the email twice and wonder who is playing the joke. That is the mood for this week’s column.

Today, we have three very serious tax questions with real consequences - let’s dive in!

My accountant triggered IRS penalties on my 2024 return. How do I fix this?

Dear Tim,

I am a single mother, and 2024 already felt like a full-contact sport before this showed up in my mailbox. I hired an accountant because I wanted the return handled the right way, and I figured paying a professional would lower the odds of a tax mess. Instead, I opened an IRS notice and found penalties and interest tied to my return, plus a balance that hit my budget like a brick.

I have emails showing I sent documents early, and I have a trail that makes me feel like the delay came from the preparer’s side rather than mine. At the same time, the IRS is looking at me, rather than my accountant, which feels wildly unfair. I am trying to figure out whether I should pay first, fight first, call the preparer first, or do all three in some order that keeps this from getting worse.

I also have kids, bills, and about six other priorities screaming for attention. I do not want to make an emotional move and turn a bad situation into a worse one. I need the practical version of this: what matters first, what can wait a few days, and how to give myself the best shot at relief.

- Trying To Clean Up A Mess

Dear Trying To Clean Up A Mess,

Although it may be jarring to receive a notice from the IRS, you might find some peace in knowing that it’s all too uncommon. The IRS sends ~170 million notices to taxpayers each year to help them meet their tax obligations.

Does this make this situation any less aggravating? It does not.

However, it does mean that at one point or another, most tax professionals have dealt with these situations during their career and are equipped to help you through this process. From our observation - the IRS usually deals with the taxpayer on the return, even when the preparer contributed to an issue. That doesn’t mean you need to navigate this alone.

Typically, the taxpayer’s first move in these situations is to call the tax professional who prepared the tax return in question. Mainly to notify them of the notice and request their assistance in responding to the IRS and determining the best course of action. Ideally, the tax professional is able to identify and explain where things went wrong while establishing a game plan on how to handle the notices received.

Part of that discussion is determining what it is that the IRS is assessing regarding your 2024 tax return. You mentioned that the notice outlined penalties, these commonly include failure-to-file and failure-to-pay, which the IRS calculates based on timing and unpaid taxes due. The exact percentages and limits are set by the IRS, and every situation depends on the specific facts of the return and the date the IRS considers it received.

Programs like First-Time Abate or Reasonable-Cause Relief may be available to taxpayers who qualify. Eligibility depends on prior compliance history and the circumstances that let to the issues. Only the IRS or a qualified tax professional can determine whether a specific taxpayer meets those criteria, but it’s helpful to be aware that these options exist.

For illustration purposes only, consider a return showing $12,000 due that the IRS records as 4 months late. Depending on the facts, penalties and interest may accumulate quickly. Addressing these notices sooner than later can save you time, money, and further frustration.

Many families find it helpful to break an IRS notice into manageable steps:

• Understand what the IRS is asking for: Look at the tax year, deadlines, and the penalty codes listed on the notice.
• Organize your documentation: Engagement letters, emails showing when documents were provided, and invoices can help clarify timelines if the IRS or your tax professional requests them.
• Contact the IRS using the instructions in the notice: This is often how taxpayers learn exactly what triggered the penalty, what relief may be available, and what information the IRS needs to review the situation.
• Follow up in writing if needed: A clear, factual timeline and evidence supported by a paper trail sometimes helps taxpayers when dealing with IRS scrutiny, applying for relief, or defending tax filings.

Your tax professional or legal counsel, if appropriate, should help guide you through this process.

Because penalties and interest may continue until the balance is resolved, some taxpayers choose to make a payment while their case is being reviewed. Others wait until the IRS responds. This is a decision best made with a qualified tax professional, since circumstances vary widely.

If a preparer’s actions contributed to the issue, taxpayers sometimes pursue reimbursement or request corrective work through that firm. That process is separate from the IRS and depends on agreements with the preparer and state-level rules governing tax preparation.

If the professional who prepared your 2024 tax return isn’t helping, or blatantly negligent in their approach to your return and the handling of the situation, it can be beneficial to get a second opinion. Wealth managers and attorneys are great people to ask for an introduction to a trustworthy tax professional - they typically run in similar circles and all three disciplines routinely collaborate with each other to serve their clients.

Bottom Line: An IRS notice feels like a crisis, but it’s a common process. Acting promptly, working with qualified professionals, staying organized, and knowing what relief programs exist can make the situation much more manageable.

I am sitting on a huge low-basis stock position. Is a charitable remainder trust smarter than gifting shares outright?

Dear Tim,

I am 60, I read the footnotes, and I usually enjoy financial complexity more than the average person should. Over the years, one stock position grew into something much larger than I ever expected. It has made me wealthier on paper, yet it has also turned into a concentration risk, a future capital-gains issue, and a planning puzzle because I have four grandchildren, a few charitable goals, and a strong desire to avoid careless moves.

Part of me wants to start gifting shares to my family and call it a day. Another part of me likes the idea of a charitable remainder trust because it sounds elegant: diversify, create income, support charity later, and maybe soften the tax hit along the way. Then again, elegant planning can become expensive theater in a hurry if the details do not fit the life in front of you.

I do not need magic. I need a framework. When does gifting make more sense, when does a donor-advised fund deserve a look, and when does a charitable remainder trust actually earn its keep instead of just producing thick binders and very fancy meetings?

- Thinking Several Moves Ahead

Dear Thinking Several Moves Ahead,

The headline answer is this: a charitable remainder trust can be powerful when you want income, charity, and diversification working together, while outright gifts usually shine when family transfer is the main goal. The real decision driver is what you want the stock to do for you next: support your lifestyle, support your heirs, support charity, or handle all three in a coordinated way.

A few details move the answer.

Support your lifestyle although this concentrated position resembles significant risk - it has also helped you accumulate wealth on paper. There are ways to utilize the holding to fund your needs - by either leaning into this risk or minimizing it. Either way, whatever remains of the position will likely receive a step-up in basis when you die before passing it on to your heirs.

Leaning into the risk, folks typically explore:

• Securities-Backed Lines of Credit to collateralize the position and utilize draws from the credit line for tax-efficient liquidity in lieu of paying sizable capital gains to liquidate shares and distribute.
• Systematic Selling matched with clever tax strategies to liquidate funds to meet your needs while complimenting the gains recognized with either a tax-loss harvesting strategy on the remainder of your portfolio, charitable deductions generated through gifting, or a combination of both.

Minimizing the risk, folks typically first explore:

• Options Overlay strategy that is designed around the long-term objectives and preferences of the investor. Common designs address one or a combination of the following; limiting downside risk, preserving stable value, or systematically unwinding the position.
• Matching the systematic selling approach mentioned above to tactfully reallocate the portfolio over time.

There are other strategies that can be assessed beyond the ones above, but I want to be sure to address the remaining use cases for your concentrated position below before I run out of space!

• Lifetime Gifting directly to grandchildren for their support can use the annual exclusion, which can move assets out of your estate gradually. However, the shares will retain their low basis and your grandchildren will have a similar buy/sell decision on their hands - albeit, likely at a lower capital gains tax rate. Kiddie tax nuances may apply for younger recipients.

• A Donor-Advised Fund (DAF) can also be useful when you want a charitable deduction and a simpler structure than a trust, especially with appreciated investments and utilizing itemized deductions. Donations to charities don’t need to be made at the same time as funding and the DAF can be taken over by your heirs when you eventually pass - leaving a philanthropic legacy for your family to carry forward.

• A Charitable Remainder Trust (CRT) is irrevocable and can create an income stream for life or for a set term, with charity receiving the remainder later - this income can be received by you to fund your retirement or by your heirs to fund lifetime gifting objectives. There are variables that can influence the charitable deduction generated at funding, but it generally resembles the present value of the remainder interest received by charity.

It’s important to note that gift amounts over the annual exemption may require you to file a Form 709 with your taxes, which tracks the excess gift amount against your lifetime gift/estate exemption. For CRT’s specifically, if income is distributed directly to heirs as part of the trust design - the present value attributed to estate gifting in lieu of the remainder charitable donation will be used to determine whether or not this is required for each income beneficiary.

Here is a simple example with round numbers. Say you own stock worth $2,000,000 with a basis of $200,000. If you sold it outright, roughly $1,800,000 of gain could come into view before tax-rate details are layered in. If instead you contributed part of that position to a charitable remainder trust, the trust could sell and diversify inside the trust structure, and you could receive an income stream while charity receives the remainder later. If your real goal is family transfer, you can designate the CRT income directly to them during the trust design process. You can also focus on annual gifts to four grandchildren yet that approach is usually much slower and doesn’t directly address the long-term impact of the concentrated risk within your portfolio.

Here is how I would approach this decision. First, write down the actual mission for the stock in one sentence. Second, separate that mission into three buckets: lifestyle income, family wealth transfer, and charitable intent. Third, run side-by-side illustrations for three paths: sell-and-pay, gift shares outright, and contribute shares to a charitable vehicle such as a donor-advised fund or charitable remainder trust. Fourth, stress-test the concentration risk, because tax efficiency loses some charm when one stock still dominates the picture.

To revisit the tax consideration: gifting appreciated stock to family often passes the carryover basis with the shares, which means the future gain issue can travel with the gift. Charitable giving works differently. In many cases, appreciated property given to a qualified charity can generate a deduction, subject to the applicable rules and limits. Publicly traded stock is usually cleaner here than private assets, which is one reason these cases deserve precision and professional guidance from a trusted wealth manager, CPA, and estate attorney.

Bottom line, a charitable remainder trust is a real tool, yet it belongs in the plan only when the plan truly calls for income plus charity plus long-range structure. When family transfer is the center of gravity, gifting and other estate-planning moves may carry more weight depending on your unique circumstances.

My brother paid $80,000 to a man in Monaco for offshore citizenship, a vineyard, and “full immunity from capital gains.” How bad is this?

Dear Tim,

My brother has always been drawn to deals that sound exclusive, complicated, and just believable enough to survive a second cup of coffee. A few months ago, he met a man who claimed to have connections in Monaco with access to a fast-track arrangement involving offshore citizenship, partial ownership in a vineyard, and what he called “full immunity from capital gains.” That phrase alone should have triggered alarms, yet my brother heard “wealth strategy” and apparently his judgment took a lunch break.

He wired $80,000, received a few polished documents, and spent a week talking like he had cracked a code the rest of us were too provincial to understand. Then the man vanished. Emails bounced, phone numbers died, and the only remaining artifact of this international master plan is the framed receipt now hanging in my brother’s office like a museum exhibit dedicated to overconfidence.

At this point, the family would love an answer that is equal parts practical and merciful. Is this just a very expensive lesson, or are there actual steps he should take right away to report it, document it, and protect himself from whatever comes next?

- Concerned About My Brother’s “Portfolio”

Dear Concerned About My Brother’s “Portfolio,”

It is funny you mention that. We get versions of this question every April, usually right around the moment somebody realizes “exclusive opportunity” was just a tuxedo on a scam.

The broad answer is that this sounds far less like tax planning and far more like fraud with a European accent. The Monaco angle is classy. The vineyard adds flair. “Full immunity from capital gains” is where the whole thing really earns its clown nose. A legitimate strategy usually comes with documentation, regulation, advisors you can verify, and a structure that still makes sense after a good night’s sleep.

This sits in the same family as the “royal prince needs help moving funds” story, the “urgent wire from the CEO” email, and the classic “please buy six thousand dollars in gift cards for a confidential corporate matter.” The packaging changes. The plot stays familiar. Urgency, secrecy, prestige, and easy money keep showing up in these stories because they work on people who want to believe they found a door everybody else missed.

Here is how I would think about it. The first priority is preserving every piece of evidence. Wire confirmations, emails, texts, agreements, screenshots, business cards, passport photos, signatures, voice notes, and the framed receipt all belong in one folder today. After that, contact the bank immediately and ask whether any recovery steps are still available. Timing matters. Then file reports with the FTC, the FBI’s Internet Crime Complaint Center, and local law enforcement. If identity documents or personal financial records changed hands, credit monitoring and account reviews deserve attention too.

A simple mental checklist helps here. If somebody promises secret tax immunity, guaranteed access, cross-border exclusivity, or returns that sound cleaner than real life, slow the whole thing down. Verify identities independently. Search licenses. Confirm entities. Involve a qualified advisor, attorney, and CPA for guidance before money moves. Scammers thrive in speed, ego, and isolation. Good planning holds up under basic questions.

One thing people miss is the shame factor. People freeze because they feel embarrassed, and that delay can make recovery harder. Fraud works because it is persuasive, polished, and timed well. Smart people still get caught. The goal after a hit like this is fast action, clean documentation, and fewer loose ends.

Bottom line: your brother probably bought a very costly story and a moderately funny piece of wall art.

This April Fools day, I hope each and every reader stays safe from common hijinks and scammers!