Thanks for this guidance. Do you happen to know which tax software handles ITIN applications most efficiently? And approximately how long should we expect for the ITIN processing?

All the major tax software programs (TurboTax, H&R Block, TaxSlayer) can handle ITIN applications equally well. They each have guided interviews that walk you through the W-7 form and explain what supporting documents you need. As for processing time, unfortunately, it's quite lengthy right now. Initial ITIN applications are taking about 7-11 weeks according to the IRS, but in practice, it can sometimes take 3-4 months, especially during peak tax season. The good news is that you can still file your return while the ITIN application is processing - you just won't receive certain credits until the ITIN is issued.

This is so true! I used TaxAct last year on an L1 visa and it asked the right questions to determine I was a resident alien for tax purposes based on the substantial presence test. Made a huge difference in available deductions.

This is exactly the kind of feedback I was looking for - thank you! Did they explain why they were reluctant to provide references? And what kind of limitations did you find in their "unlimited" service when you reviewed the contract?

They claimed client confidentiality was the reason for not providing references, which is somewhat understandable in tax matters, but most firms find ways to connect potential clients while respecting privacy. When we pushed, it felt like they just didn't have many satisfied customers they could showcase. As for the "unlimited" service limitations, the base fee only covered routine updates to existing documentation. Any changes to your corporate structure, new intercompany transactions, or expanding to new jurisdictions triggered additional fees. Also, their response time guarantee only applied to "routine" questions - anything complex was subject to their availability and often took weeks to resolve.

We use Deloitte for our transfer pricing work. They're definitely more expensive than boutique firms like CrossBorder, but the peace of mind is worth it for us. Their documentation has helped us successfully navigate audits in multiple countries. The big downside is that unless you're a major client, you're often working with junior staff except for the final review.

We switched from PwC to a smaller specialized firm similar to CrossBorder and honestly haven't noticed a drop in quality. The Big 4 expertise is excellent but you pay a significant premium. The mid-tier firms often have former Big 4 partners/managers but with more reasonable pricing. The key is finding a firm with specific experience in your industry and countries of operation.

This is really helpful! I definitely haven't had any penalties before. Is First Time Penalty Abatement something I should specifically mention in my letter? Or should I try to call and request this directly?

You should definitely mention First Time Penalty Abatement specifically in your letter or phone call. Use those exact words. Many IRS agents are trained to check for FTA eligibility, but some might not think to offer it unless you ask directly. It's usually faster to call and request it, as they can often approve it immediately over the phone if you qualify. Just have your notice information ready when you call. In your case, since you've never had penalties before, there's a very good chance you'll qualify!

This is such good advice! I made the mistake of waiting to pay anything while I disputed the penalty, and the interest just kept growing. Ended up owing way more in the end.

Thanks for the insider perspective! Do you think I should say something to my friend? He seems so confident about all this, and when I expressed concerns he just laughed it off saying "everyone does it." I don't want to be preachy but also don't want him to get in serious trouble.

I would definitely say something, but approach it carefully. Instead of making it about him being wrong, maybe share an article about audit risk factors or a story about someone facing severe penalties. You could mention that you spoke with a tax professional who raised red flags about some of these deductions. If he's resistant, you could suggest he get a second opinion from another CPA - one who doesn't have a vested interest in keeping him as a client by promising aggressive deductions. Sometimes people need to hear the same message from multiple sources. Just remember that ultimately, it's his decision and his risk to take. You've done your part by raising the concern.

Did you have receipts for everything? I've heard if you keep perfect records they can't really say much even if the deductions are aggressive?

Does your brother get audited? This seems like exactly the kind of thing that would trigger IRS scrutiny. I'm interested but nervous about drawing attention.

He's been doing this for about 8 years and has been audited once - but not specifically for the vehicles. The audit covered his entire business operations and they did review his vehicle documentation. Since he keeps extremely detailed records (mileage logs, business purpose for trips, maintenance records, etc.), there were no issues with the vehicle deductions. His accountant told him vehicle deductions don't trigger audits on their own - it's usually when they're combined with other unusual deductions or when the business use percentage seems unrealistic compared to your type of business. The key is legitimacy and documentation - this isn't a strategy for getting personal vehicles, it's for actual business vehicles that happen to be nice.

Is that really worth the extra complexity though? Seems like you'd spend a lot on accounting and legal fees just to maintain two entities.