Enrolled Agent – IRS Tax Representation | International & Foreign Taxes: The IRS Enrolled Agent credential is one of the lesser-known tax credentials available, but one of the most difficult to achieve. Why? Because the exam is a three-part (taken over three days) exam covers a broad range of different tax-related issues.
Many people attempt the Enrolled Agent exam, only to fail. Instead of getting back on the horse and trying again-they give up. This is unfortunate, because anyone who sits for the exam is obviously someone who takes tax representation very seriously.
Enrolled Agent vs. Tax Attorney
These two credentials should not really be compared, as they are two very different credentials. At Golding & Golding, our lead attorney, Mr. Sean M. Golding, is both an enrolled agent and a tax attorney. So what does that mean?
Enrolled Agent – Nationwide & International Practice
For individuals who are tax attorneys, they typically practiced tax law in the state in which they are licensed. If they are licensed by the Tax Court, they can also practice before tax authorities in all 50 states.
But, merely being a tax attorney does not entitle an individual to represent taxpayers before the IRS in states outside of any state they’re licensed to practice law in.
For example, an attorney is licensed in California. A client is in New Jersey and gets audited by the IRS in New Jersey. If the attorney is going to go to New Jersey to represent the client in the IRS audit (not tax court), the attorney will have to have one of the following credentials:
- An Enrolled Agent
- An license to practice law in New Jersey, or
- Tax practitioner licensed in New Jersey.
Enrolled Agent vs. CPA
There are plenty of CPAs who are very experienced in tax law. But, just because a person is a CPA does not mean they have tax experience. There are many CPAs who focus exclusively on accounting or auditing (business auditing not tax auditing).
Alternatively, an enrolled agent does not necessarily have an accounting background. Rather, as an enrolled agent, they have a solid tax background.
When a person is being audited before the Internal Revenue Service for tax-related issues, it is important to have an enrolled agent or tax attorney representing you on those issues.
It may also be beneficial to have a CPA representing the person in an audit, but overall, enrolled agent is usually preferred in an audit situation.
Beyond learning the enrolled agent credential, many IRS tax practitioners will also develop a further specialty in an area of law. For example, at Golding & Golding, we focus our entire tax practice on international tax law and specifically IRS offshore voluntary disclosure.
Other enrolled agents may focus on issues such as business tax, tax compliance, corporate tax, etc..
The IRS likes to use specific terms when designating individuals a job title or credential. For example, someone may be titled as a Tax Specialist working at the IRS but did not achieve the enrolled agent credential.
Likewise, while the enrolled agent credential lends itself to the designation of being a “tax expert,” that is a pretty tall order. We have worked with some of the most renowned tax attorneys nationwide who would never think of considering themselves as tax experts.
If you are being represented by any individual advertising as an expert, you may want to refer them to the following article by the Bar Association.
IRS Offshore Disclosure
At Golding & Golding, we focus exclusively on IRS Offshore Disclosure.
Voluntary Disclosure is for individuals, estates, and businesses who are out of compliance with the IRS and the Department of Treasury. What does that mean? It means that if you are required to file a U.S. tax return and you don’t do so timely, then you are out of compliance.
If the IRS discovers that you are out of compliance, you may become subject to extensive fines and penalties – ranging from a warning letter all the way up to tax liens, tax levies, seizures, and criminal investigations. To combat this, you can take the proactive approach and submit to Voluntary Disclosure.
Golding & Golding – Offshore Disclosure
At Golding & Golding, we limit our entire practice to offshore disclosure (IRS Voluntary Disclosure of Foreign and U.S. Assets). The term offshore disclosure is a bit of a misnomer, because the term “offshore” generally connotes visions of hiding money in secret places such as the Cayman Islands, Bahamas, Malta, or any other well-known tax haven jurisdiction – but that is not the case.
In fact, any money that is outside of the United States is considered to be offshore; the term offshore is not a bad word. In other words, merely because a person has money offshore (a.k.a. overseas or in a foreign country) does not mean that money is the result of ill-gotten gains or that the money is being “hidden.” It just means it is not in the United States. Many of our clients have assets and bank accounts in their homeland countries and these are considered offshore assets and offshore bank accounts.
The Devil is in the Details…
If you do have money offshore, then it is very important to ensure that the money has been properly reported to the U.S. government. In addition, it is also very important to ensure that if you are earning any foreign income from that offshore money, that the earnings are being reported on your U.S. tax return.
It does not matter whether your money is in a country that does not tax a particular category of income (for example, many Asian countries do not tax passive income). It also does not matter if you are a dual citizen and/or if that money has already been taxed in the foreign country.
Rather, the default position is that if you are required to file a U.S. tax return and you meet the minimum threshold requirements for filing a U.S. tax return, then you have to include all of your foreign income. If you already paid foreign tax on the income, you may qualify for a Foreign Tax Credit. In addition, if the income is earned income – as opposed to passive income – and you meet either the Bona-Fide Resident Test or Physical-Presence Test, then you may qualify for an exclusion of that income; nevertheless, the money must be included on your tax return.
What if You Never Report the Money?
If you are in the unfortunate position of having foreign money or specified foreign assets that should have been reported to the U.S. government, but which you have not reported — then you are in a bit of a predicament, which you will need to resolve before it is too late.
As we have indicated numerous times on our website, there are very unscrupulous CPAs, Attorneys, Accountants, and Tax Representatives who would like nothing more than to get you to part with all of your money by scaring you into believing you are automatically going to be arrested, jailed, or deported because you have unreported money. While that is most likely not the case (depending on the facts and circumstances of your specific situation), you may be subject to extremely high fines and penalties.
Moreover, if you knowingly or willfully hid your foreign accounts, foreign money, and offshore assets overseas, then you may become subject to even higher fines and penalties…as well as a criminal investigation by the special agents of the IRS and/or DOJ (Department of Justice).
Getting into Compliance
There are five main methods people/businesses use to get into compliance. Four of these methods are perfectly legitimate as long as you meet the requirements for the particular mechanism of disclosure. The fifth alternative, which is called a Quiet Disclosure a.k.a. Silent Disclosure a.k.a. Soft Disclosure, is ill-advised as it is illegal and very well may result in criminal prosecution.
We are going to provide a brief summary of each program below. We have also included links to the specific programs. If you are interested, we have also prepared very popular “FAQs from the Trenches” for FBAR, OVDP and Streamlined Disclosure reporting. Unlike the technical jargon of the IRS FAQs, our FAQs are based on the hundreds of different types of issues we have handled over the many years that we have been practicing international tax law and offshore disclosure in particular.
After reading this webpage, we hope you develop a basic understanding of each offshore disclosure alternative and how it may benefit you to get into compliance. We do not recommend attempting to disclose the information yourself as you may become subject to an IRS investigation insofar as you will have to answer questions directly to the IRS, which you can avoid with an attorney representative.
If you retain an attorney, then you will get the benefit of the attorney-client privilege which provides confidentiality between you and your representative. With a CPA, there is a relatively small privilege which does provide some comfort, but the privilege is nowhere near as strong as the confidentiality privilege you enjoy with an attorney.
Since you will be dealing with the Internal Revenue Service and they are not known to play nice or fair – it is in your best interest to obtain an experienced Offshore Disclosure Attorney.