Protect Yourself from Unethical IRS Voluntary Disclosure Attorneys (Golding & Golding)

Protect Yourself from Unethical IRS Voluntary Disclosure Attorneys (Golding & Golding)

How to Find an Experienced IRS Voluntary Disclosure Attorney

If you have recently learned that you have not been properly reporting or disclosing your foreign income, assets, investments, or accounts to the Internal Revenue Service, you may be researching what your different options are.

IRS Voluntary Disclosure

At the end of the day, you will find that there are only a few options available, and the main (legal) options are:

  • IRS Voluntary Disclosure (Program)
  • Streamlined Domestic Offshore Procedures (SDOP)
  • Streamlined Foreign Offshore Procedures (SFOP)
  • Reasonable Cause
  • Delinquency Procedures (if you have no unreported income)

Inexperience is Costly

We are the only Board Certified Tax Law Firm that focuses exclusively on IRS Voluntary Disclosure. 

Each month, cases are referred to us from clients who first utilized less experienced attorneys (who baited the client with artificially low fees or by touting trumped up former experience) — only to learn that the attorneys nearly ruined their case and brought them dangerously close to criminal trouble with the IRS.

By the time the Client retains new counsel, they end up spending double, if not triple of what they would have spent had they retained an experienced attorney to begin with.

We are finding the same few attorneys running the same few scams, so we put together a list of warnings to help you better vet out potential voluntary disclosure Attorney to help you determine whether they really know what they’re doing.

Recent Example of Unethical Lawyering

About a year ago we had a client contact us to let us know that they were deciding between streamlined and OVDP.  They had spoken with a junior attorney during a free initial consultation who did not have much experience representing his own clients in OVDP or Streamlined. (Less than 15 years of attorney experience and less than 5 years of law practice experience.)

The Attorney Reverse Baits the Individual

To quickly sell the client before he could speak with more experienced Attorneys, this Attorney told the client that he could go streamlined or reasonable cause because the amount of income was low. He told the client that anybody who told him to go OVDP was trying to scare him.

*This is done to try to avoid the Attorney speaking with more experienced counsel before making an informed decision.

The Individual Contacts our Firm

When we spoke to the client, we learned from the client that he was willful. He let us know he was willful, and although he thought OVDP was unfair (he had only been a U.S. Person for tax purposes for less than 5 years), he clearly did not qualify for Streamlined or Reasonable Cause. He had spoken with another experienced OVDP Attorney as well in Los Angeles, who agreed he was willful.

In fact, just as with Manafort, he had received a questionnaire from his tax preparer and identified “No” on the organizer, even though he was aware he had the foreign accounts. He confirmed that he had no accounts with his CPA.

Worse yet, in  further speaking with the individual, it turns out that he was willfully out of compliance in two different countries, and the other country was known for using criminal procedures to enforce tax compliance.

The Individual Went Against His Better Judgment

It turns out the client ended up retaining the Junior Attorney firm. We understood: they lied to him, and told him he could go streamlined since it was only a minimal amount of income. The fees are less, and the process is simpler.

But, if a person was willful (even if it was small amount of money or for only a few years) they are disqualified from the Streamlined Program or Reasonable Cause.

Post-Manafort Conviction

Fast forward to about a week or two ago and the Individual contacted us again in a complete state of panic, because he had allowed the other firm to sell him on the lower fees even know he knew he was willful. Like Manafort, he intentionally misrepresented his information to the CPA firm.

He didn’t know what to do, and since he has already submitted an intentionally misrepresentative Reasonable Cause Letter, stating he was non-willful — he may very well end up in very serious situation. He could be facing a potential IRS Special Agent Criminal Investigation and possible jail time.

Why? Because even though the amount of money with small, he knowingly and willfully made false statements to the IRS, which is a crime.

While the Individual will make a claim against the firm that goaded him into Reasonable Cause, it may not save him from the IRS.

5 Important Helpful Tips

Be Careful of Inexperienced Counsel & Misleading Former Experience

Every Attorney has to start somewhere, right? With that said, it should not be on your case.

Utilizing an attorney who has only had their firm for a few years, and practices several different types of tax law is not the Attorney you want handling complex matters such as IRS Voluntary Disclosure; it is a recipe for disaster.

From the majority of cases that get referred to our firm from prior counsel, many of them involve attorneys with little experience who bit off more than they can chew — and have less than 15-20 years of attorney experience representing their own clients as lead counsel.

They tout experience they do not have, and misrepresent prior experience to make themselves appear more experienced than they really are.

*Click Here to Learn About how Attorneys Falsely Market their IRS Voluntary Disclosure experience.

The Firm has Keyword Friendly Domain Names

Be sure to check the firm name and Attorneys online to see if they have purchased other domain names touting experience in other areas of law. This a common practice for newer attorneys trying to give the appearance that they specialize, by purchasing keyword-specific domain names.  The reason is twofold:

– Each domain is “keyword friendly” to try to move up the SEO/Google rankings; and 

– They want to trick you into believing they only practice in that one area of law, but then they have 10 other domain names for 10 different other areas of law as well. If you are searching only one area of law, they hope the other names will not pop-up in a search.

Make Sure Your Attorney is Experienced in All Types of Voluntary Disclosure Matters.

IRS Voluntary Disclosure is a specialty area of law. The firm you retain to handle your offshore voluntary disclosure matters should have voluntary disclosure as the primary area of law that they handle. Handing a few non-complex Streamlined Disclosure matters is only one small facet of IRS Voluntary Disclosure.

If you go to the doctor because you have a pain, the first place you go is a general practitioner, so he or she can give you a general assessment of what the problem might be.  The general practitioner does not handle the specific surgery, and refers it to a specialist to perform.

The same holds true for IRS Voluntary Disclosure matters.

Interview Your Attorney & Your CPA/EA Handling the Taxes

In the end, you are paying an attorney to be joined at the hip with you and take you through the voluntary disclosure maze.  It is not the time to be shy or bashful.  It is the time to do your due diligence and ask the attorney the hard questions.

Just because an attorney handled a handful of non-complex streamlined disclosure cases does not make them a voluntary disclosure lawyer.

You should ask them:

– How many OVDP/Voluntary Disclosure (non-Streamlined) cases have they handled as Lead Counsel?

– How many OVDP Opt-Out have they handled as Lead Counsel?

– How many complex audits have they handled representing their own client?

– How many complex cases have they litigated?

– How many cases have they tried?

– Do they have an advanced credential such as being an Enrolled Agent or CPA?

– Have they followed-up their education by obtaining a Masters in Tax Law (LL.M.) which requires upwards of 15 to 20 graduate level courses in tax?

– Are they a Board Certified Tax Law Specialist?

Watch Out for Free Initial Consultations

These consultations are not really free, and they are simply designed to scare you into quickly signing with the firm – against your better judgment.

Recent Example of the Free Consultation “Scare and Sell”

A client contacted us to let us know that even though they spoke with one of these free initial consultation attorneys, that they did not want to use the firm and preferred to use our firm – but they were concerned.

We asked why they were concerned, and they proceeded to tell us that during the initial consultation, the attorney demanded highly confidential and completely unnecessary information during the initial call; the clients were scared, and they obliged.

When the client told the other attorney that they did not want to proceed with them, and that the client wanted the attorney to disregard the confidential information, the attorney refused to provide any assurances that he could do that (which of course sent the client into a panic because the attorney was tacitly making it sound as if he was not going to disregard that confidential information, or keep it safe.)

What you will find is that most experienced IRS Voluntary Disclosure Attorneys charge an initial consultation fee. That is because you are contacting the attorney to obtain information about what your options are.

The attorney is then using his or her experience to speak with you on a scheduled call, to provide you important information about how you can proceed, absent of any salesmanship.

Whether or not you retain the firm or not, and/or proceed with IRS Voluntary Disclosure — you will have been educated by an experienced attorney in this field of law on issues involving you and the IRS.

Good Luck

We hope that you use these different steps to help protect and guard you from the fear mongering and scaremongering that has been going on recently, especially with the upcoming termination of the OVDP program.

*For a more detailed analysis about the dangers of Inexperienced OVDP and Streamlined Counsel, Click Here.

We Specialize in Safely Disclosing Foreign Money

We have successfully handled a diverse range of IRS Voluntary Disclosure and International Tax Investigation/Examination cases involving FBAR, FATCA, and high-stakes matters for clients around the globe (In over 65 countries!)

Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.

Examples of areas of tax we handle

IRS Penalty List

The following is a list of potential IRS penalties for unreported and undisclosed foreign accounts and assets:

Failure to File

If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty. The failure-to-file penalty is generally more than the failure-to-pay penalty.

The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 percent of your unpaid taxes. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.

Failure to Pay

f you do not pay your taxes by the due date, you will generally have to pay a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. This penalty can be as much as 25 percent of your unpaid taxes. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty.

However, if you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show that you failed to file or pay on time because of reasonable cause and not because of willful neglect.

Civil Tax Fraud

If any part of any underpayment of tax required to be shown on a return is due to fraud, there shall be added to the tax an amount equal to 75 percent of the portion of the underpayment which is attributable to fraud.

A Penalty for failing to file FBARs

The civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign financial account per violation. See 31 U.S.C. § 5321(a)(5). Non-willful violations that the IRS determines were not due to reasonable cause are subject to a $10,000 penalty per violation.

A Penalty for failing to file Form 8938

The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.

A Penalty for failing to file Form 3520

The penalty for failing to file each one of these information returns, or for filing an incomplete return, is the greater of $10,000 or 35 percent of the gross reportable amount, except for returns reporting gifts, where the penalty is five percent of the gift per month, up to a maximum penalty of 25 percent of the gift.

A Penalty for failing to file Form 3520-A

The penalty for failing to file each one of these information returns or for filing an incomplete return, is the greater of $10,000 or 5 percent of the gross value of trust assets determined to be owned by the United States person.

A Penalty for failing to file Form 5471

The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.

A Penalty for failing to file Form 5472

The penalty for failing to file each one of these information returns, or to keep certain records regarding reportable transactions, is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency.

A Penalty for failing to file Form 926

The penalty for failing to file each one of these information returns is ten percent of the value of the property transferred, up to a maximum of $100,000 per return, with no limit if the failure to report the transfer was intentional.

A Penalty for failing to file Form 8865

Penalties include $10,000 for failure to file each return, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return, and ten percent of the value of any transferred property that is not reported, subject to a $100,000 limit.

Fraud penalties imposed under IRC §§ 6651(f) or 6663

Where an underpayment of tax, or a failure to file a tax return, is due to fraud, the taxpayer is liable for penalties that, although calculated differently, essentially amount to 75 percent of the unpaid tax.

A Penalty for failing to file a tax return imposed under IRC § 6651(a)(1)

Generally, taxpayers are required to file income tax returns. If a taxpayer fails to do so, a penalty of 5 percent of the balance due, plus an additional 5 percent for each month or fraction thereof during which the failure continues may be imposed. The penalty shall not exceed 25 percent.

A Penalty for failing to pay the amount of tax shown on the return under IRC § 6651(a)(2)

If a taxpayer fails to pay the amount of tax shown on the return, he or she may be liable for a penalty of .5 percent of the amount of tax shown on the return, plus an additional .5 percent for each additional month or fraction thereof that the amount remains unpaid, not exceeding 25 percent.

An Accuracy-Related Penalty on underpayments imposed under IRC § 6662

Depending upon which component of the accuracy-related penalty is applicable, a taxpayer may be liable for a 20 percent or 40 percent penalty

Possible Criminal Charges related to tax matters include tax evasion (IRC § 7201)

Filing a false return (IRC § 7206(1)) and failure to file an income tax return (IRC § 7203). Willfully failing to file an FBAR and willfully filing a false FBAR are both violations that are subject to criminal penalties under 31 U.S.C. § 5322.  Additional possible criminal charges include conspiracy to defraud the government with respect to claims (18 U.S.C. § 286) and conspiracy to commit offense or to defraud the United States (18 U.S.C. § 371).

A person convicted of tax evasion

Filing a false return subjects a person to a prison term of up to three years and a fine of up to $250,000. A person who fails to file a tax return is subject to a prison term of up to one year and a fine of up to $100,000. Failing to file an FBAR subjects a person to a prison term of up to ten years and criminal penalties of up to $500,000.  A person convicted of conspiracy to defraud the government with respect to claims is subject to a prison term of up to not more than 10 years or a fine of up to $250,000.  A person convicted of conspiracy to commit offense or to defraud the United States is subject to a prison term of not more than five years and a fine of up to $250,000.

What Should You Do?

Everyone makes mistakes. If at some point that you should have been reporting your foreign income, accounts, assets or investments the prudent and least costly (but most effective) method for getting compliance is through one of the approved IRS offshore voluntary disclosure program.

Be Careful of the IRS

With the introduction and enforcement of FATCA for both Civil and Criminal Penalties, renewed interest in the IRS issuing FBAR Penalties, crackdown on Cryptocurrency (and IRS joining J5), the termination of OVDP, and recent foreign bank settlements with the IRS…there are not many places left to hide.

4 Types of IRS Voluntary Disclosure Programs

There are typically four types of IRS Voluntary Disclosure programs, and they include:

Contact Us Today; Let us Help You.