Attorneys Using Outside CPAs Put Streamlined Filings at Risk: Did your Attorney refer you to an outside CPA? Is your submission now delayed, and your streamlined or VDP (Voluntary Disclosure) sitting in limbo? With rumblings of the IRS ending the streamlined program, and foreign accounts compliance remaining as a key enforcement priority — any unnecessary delay can put your submission at serious risk — and subject IRS offshore disclosure applicants to offshore fines and penalties.
For an IRS offshore disclosure submission to work most effectively, the entire Tax and Legal matter (and subsequent IRS examination or follow-up) is handled in-house by highly experienced counsel.
This is not only to protect the attorney-client confidentiality, but also to ensure the submission is timely.
Attorneys Using Outside CPAs Put Streamlined Filings at Risk
When attorneys use outside CPAs, it puts streamlined filings at risk. Several times throughout the year, our firm is contacted by clients seeking representation in offshore disclosure matters — when they already have counsel.
It is always the same story.
It starts with a less experienced attorney that sells the client a false bill of goods. The attorney misrepresents the nature and protection of the Kovel letter, and uses sales terms like “routine,” and/or “straightforward.”
The client learns later in the process that the artificially reduced rate does not include tax preparation, and the client has no say in the CPA selection process.
And, with some CPA firms charging $350 per hour for tax work, the client may be subject to tens of thousands of dollars of additional fees that were not explained to the client at the time of signing with the attorney.
These Attorneys tend to select the CPA that helps benefit their own practice, and oftentimes they do not properly vet the CPA firm. This causes many unnecessary headaches for the clients, because:
- Many CPAs do not specialize in issues such as PFIC, FBAR, FATCA and need time to get up to speed — on your dime.
- These CPAs are billing you by the hour and the attorney has no control over what the CPA bills you.
- Kovel does not provide any protection for the preparation of the tax returns, and puts the attorney-client confidentiality at risk.
*Most Importantly: The Attorney is at the mercy of the CPA. So, if it takes the CPA 6-9 months to prepare the returns, either because they need to get up to speed, or it is busy season — or your case is simply not a priority to the CPA — your are a sitting duck, just waiting fo the IRS to strike.
Offshore Disclosure is Specialty Area of Tax Law for Experienced Counsel
People familiar with our firm know we are passionate about offshore disclosure. We have helped thousands of people in over 75 countries with international tax, FBAR, FATCA and offshore disclosure.
When a client comes to us upset because a less experienced firm purports to have experience they do not have, are unable to timely submit the client to Streamlined or VDP, uses an outside CPA that “up-charges” the client, and puts the client into a worse position than when they started — we get upset.
Here is a recent example of an issue that came to us from another attorney in this type of situation:
Example of a Sloppy and Untimely Streamlined Submission
A client comes to us after losing faith in their current counsel.
They ask us how long it takes for our firm to submit to streamlined disclosure. We explain, it ranges, but generally within a few months.
A. The client tells us they have been twiddling their thumbs for several months now. They retained counsel many months ago, and the counsel then retained a CPA — neither who respond timely to the client’s calls or emails.
B. We review the summary points the law firm sent about Kovel, and they are all wrong; it’s a sales pitch alleging an attorney-client privilege for tax return preparation — which simply does not exist. The CPA can charge their own fees, and because of the language used by the attorney re: Kovel, the client feels stuck with the CPA.
C. Next, the client asks us to look at the Attorney and CPA charges. It turns out the CPA and law firm seriously up-charged the client tens of thousands of dollars to review simple saving and check bank account statements.
D. The client then asks for a copy of the work performed so far. The work is sloppy. Not only is the CPA charging $350 per hour, but the submission is lacking in several areas:
- The PFIC for the Mutual Fund analysis is missing or lumped together into a single 8621 for mutual mutual funds;
- The categories of filers for Form 5471 are incorrect;
- The exchange rates used are not the standard rates experienced practitioners use;
- The 720 is missing for life insurance premiums; and
- The retirement income is not accounted for (read: it is not automatically exempt)
The Client Gets Upset at the CPA, Confidentiality is at Risk
If you were this client, you would be upset. So, the client contacts the Attorney, and the Attorney provides the following statement:
“We don’t handle the tax returns here, you should take it up with the CPA.”
So now, the client reaches out to the CPA, and they get into a heated discussion about the bill, the review, the sloppy work, etc. But, since there is no attorney-client privilege with the CPA, the client has to tread lightly.
Fast-Forward to 30-Days Later
The streamlined submission does not get submitted timely, and the client is audited for an unrelated reason.
Result: The client has not submitted to the Program, but now the client is under audit, and out tens of thousands of dollars.
Don’t be Misled by Inexperienced Counsel
Some less experienced Attorneys see offshore disclosure as a part-time practice. They handle other areas of tax law as well, and if they can snag a few streamlined cases, great.
They operate as a mill law firm, where each case gets the same sub-par treatment as the one before it — and the one after it.
These Attorneys refer the case to any CPA that serves their best interest, with no regard for the best interest of the client.
Your case matters.
No matter how small you think your case is, your case is important.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.