Did an IRS Special Agent Leave Their Business Card: What Next?

Did an IRS Special Agent Leave Their Business Card: What Next?

Did an IRS Special Agent Leave Their Business Card: What Next?

The IRS special agents represent the faction of the Internal Revenue Service tasked with pursuing potential criminal investigations. Unlike a civil audit, in which a taxpayer receives a notice and information document request(s), the initial interaction with an IRS special agent is different — and will oftentimes involve the element of surprise. Usually, the initial meeting with an IRS agent occurs when the taxpayer at least expects it, so that the IRS special agents can catch the taxpayer off guard and get them to talk, even if they are not technically required to do so (and outside the presence of an attorney). If the IRS special agents come to your house, for example, when you are not there, they may leave a business card.

What happens next?

IRS Special Agents Signal a Potential Criminal Investigation

The first thing to keep in mind is that any matter involving the Internal Revenue Service and IRS special agents should be taken seriously. That is because the IRS special agents only get involved when there is a potential issue of criminal violations. Taxpayers should be aware that ultimately they will have to respond; they should do so promptly.

Do Not Disregard or Bury Your Head in Sand

When the taxpayer first sees a business card with the names of IRS special agents, they may understandably become overwhelmed — and their knee-jerk reaction may be to just bury their head in the sand until they receive additional notice communications. While burying your head in the sand with these types of matters may feel good for the moment, it could lead to potential issues down the line, especially if the agents are talking to other witnesses and individuals.

Timing is Important

Generally, the taxpayer should respond to the IRS agent sooner rather than later. It does not mean that the taxpayer should immediately run to the phone and call the IRS agents right away, but they should consider what their strategy will be and anticipate what the matter may be.

Consider speaking with a Board-Certified Tax Lawyer Specialist

Dealing with the IRS special agents is a serious situation. Anything that the taxpayer says to the IRS agents could potentially be used against them later, so they should consider speaking with one or more board-certified tax law specialists before engaging in any communications with the IRS special agents.

Check the Lawyer’s Credentials Before Speaking with them

Free consultations from ‘Tax Experts’ can be alluring.

Unfortunately, the internet is littered with attorneys falsely claiming to be experts and even falsely claiming to be board-certified tax law specialists. Taxpayers should be sure to speak to multiple attorneys and to check credentials on the bar website for the state in which he attorney is licensed.

Even if the attorney only handles federal cases,  the State Bar directory will still identify if the attorney is a board-certified tax law specialist.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Late-Filing Disclosure Options

If a Taxpayer is out of compliance, there are various international offshore tax amnesty programs that they can apply to safely get into compliance. Depending on the specific facts and circumstances of the Taxpayers’ noncompliance, they can determine which program will work best for them.

*Below please find separate links to each program with extensive details about the reporting requirements and examples.

Streamlined Filing Compliance Procedures (SFCP, Non-Willful)

The Streamlined Filing Compliance Procedures is one of the most common programs used by Taxpayers who are non-willful and qualify for either the Streamlined Domestic Offshore Procedures or Streamlined Foreign Offshore Procedures.

Streamlined Domestic Offshore Procedures (SDOP, Non-Willful)

Taxpayers who are considered U.S. residents and file timely tax returns each year but fail to report foreign income and/or assets may consider the Streamlined Domestic Offshore Procedures.

Streamlined Foreign Offshore Procedures (SFOP, Non-Willful)

Taxpayers who are foreign residents may consider the Streamlined Foreign Offshore Procedures, which is typically the preferred program of the two streamlined procedures. That is because under this program, Taxpayers can file original returns, and the 5% title 26 miscellaneous offshore penalty is waived.

Delinquent FBAR Submission Procedures (DFSP, Non-Willful/Reasonable Cause)

Taxpayers who only missed the FBAR reporting and do not have any unreported income or other international information reporting forms to file may consider the Delinquent FBAR Submission Procedures — which may include a penalty waiver.

Delinquent International Information Returns Submission Procedures (DIIRSP, Reasonable Cause)

Taxpayers who have undisclosed foreign accounts and assets beyond just the FBAR — but have no unreported income — may consider the Delinquent International Information Return Submission Procedures. Before November 2020, the IRS was more inclined to issue a penalty waiver, but since then this type of delinquency procedure submission has morphed into a reasonable cause request to waive or abate penalties.

IRS Voluntary Disclosure Procedures (VDP, Willful)

For Taxpayers who are considered willful, the IRS offers a separate program referred to as the IRS Voluntary Disclosure Program (VDP). This program is used by Taxpayers to disclose both unreported domestic and offshore assets and income (before 2018, there was a separate program that only dealt with offshore assets (OVDP), but that program merged back into the traditional voluntary disclosure program (VDP).

Quiet Disclosure

Quiet disclosure is when a Taxpayer submits information to the IRS regarding the undisclosed foreign accounts, assets, and income but they do not go through one of the approved offshore disclosure programs. This is illegal and the IRS has indicated they have every intention of investigating Taxpayers who they discover intentionally sought to file delinquent forms to avoid the penalty instead of submitting to one of the approved methods identified above.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.