FATCA & FBAR Conviction – Risk of Using CPAs in Offshore Disclosure

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FBAR & FATCA Conviction - Risk of Using CPAs in Offshore Disclosure - Golding & Golding

FBAR & FATCA Conviction – Risk of Using CPAs in Offshore Disclosure – Golding & Golding

FATCA & FBAR Conviction – Risk of Using CPAs in Offshore Disclosure

Paul Manafort (President Trump’s former Campaign Manager) was recently convicted of many different crimes relating to the non-disclosure of offshore accounts. The main problem was that Manafort:

  • Kept the foreign accounts secret;
  • He did not disclose them to the IRS; and
  • He used a CPA.

How Did He Get Caught?

Manafort ended up being done in by his own accountant, who testified against him.

Isn’t There an Attorney Client Privilege with a CPA?

No. There is an Accountant-Client Privilege, but it does not carry near the same weight or protection as the Attorney-Client Privilege. It does not protect against criminal or quasi-criminal investigations.

What About a Kovel Letter?

Kovel Letters are not statutory law. All the “Kovel Letter” does is let you speak to a CPA or Accountant on matters in which your attorney is not well-versed enough in an area of tax law sufficient to provide you tax legal advice.

Therefore, the Attorney refers you to an Accountant for limited-purposes.

Is a Kovel Statutory Law?

No. And, if the matter goes to court, the judge does not have to accept the Kovel Letter, and your CPA can be questioned.

What if I spoke to the CPA about other issues, such as Willfulness?

Unfortunately, that information may be discoverable, and your confidentiality may be at risk.

My Attorney did Not Explain this to me?

Of course not.

Many less experienced attorneys put way too much weight and emphasis on a “Kovel Letter,” without properly explaining to you all the limitations it has.

Generally, these attorneys are sole practitioners or general tax practitioners juggling various different areas of law. They bait you in with a free 15-30 minute “free consultation,” and spend that time trying to dissuade you from speaking with, or retaining more experienced counsel.

How Can I Protect Myself?

The best way to maintain confidentiality and the Attorney-Client privilege is to retain a Dually-Licensed Attorney/Enrolled Agent or Attorney/CPA.

Understanding Legal vs. Accountant Privileges

Attorney Client-Privilege

The Attorney-Client Privilege is a serious benefit to clients. It facilitates near airtight confidentiality (short of the client indicating he or she is going to inflict death or serious bodily harm to another person).

Accountant Client Privilege

The Accountant-Client Privilege is not as awesome. While the privilege provides some protection, it does not extend to criminal investigation, and is limited in scope.

IRS Offshore Disclosure & Privileges

When a person is out of compliance for Offshore/Foreign related matters, there are various IRS offshore amnesty “voluntary disclosure” programs a person can submit to.

No matter which amnesty program a person submits to, there are generally five (5) main components to the submission:

  • Evaluating and assessing the tax and legal situation in detail
  • Submitting amended or original tax returns
  • Submitting FBARs and International Informational Returns
  • Preparing a detailed Legal Statement(s)
  • Providing back-end support and defense

Golding & Golding, Board-Certified Tax Law Specialist Team

Golding & Golding represents clients worldwide in over 70-countries exclusively in Streamlined, Offshore and IRS Voluntary Disclosure matters. We have successfully completed more than 1,000 streamlined and voluntary disclosure submissions.

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants and Financial Professionals worldwide.