Is Your Tax Preparer Recommending Illegal IRS Offshore Reporting?
In recent months, we have been contacted by several clients coming to us with the same IRS problem. They previously used a CPA, Attorney, or other tax professional who had failed to properly advise them on reporting foreign accounts, income, assets, or investments to the IRS.
At this point, many times the problem is still fixable.
Illegal IRS Offshore Reporting
But, instead of recommending that the client enter one of the approved IRS offshore tax amnesty programs and resolve their issues legally – these individuals are being railroaded into either making a quiet disclosure or other intentional misrepresentations or omissions to the IRS – which could lead to much more severe fines and penalties.
In some situations, the tax professional even misrepresents that they are a U.S. Licensed Attorney, when they have not been licensed by any state bar in the nation.
This severely impacts the “attorney-client privilege,” which is not available unless the representative is an attorney.
IRS Offshore Compliance Common Mistakes
International tax and offshore compliance are specialty areas of law. Generally, tax attorneys who specialize in this area of law will have advanced credentials and degrees (Master’s of Tax Law and/or Board Certified Specialist Credential) – and focus their entire practice on this area of law.
The reason being, is because reporting offshore money has become (and remains) the key enforcement party the IRS. The law is continually changing and evolving.
Common mistakes we see, include:
- Presuming foreign retirement is not taxable in the U.S.
- Not reporting foreign retirement on FBAR, FATCA, etc.
- Not reporting investment funds properly on Form 8621 (PFIC) and FBAR
- Excluding foreign income that is otherwise taxable and reportable
- Misapplying the Foreign Earned Income Exclusion
- Advising clients to go streamlined when they were willful
- Misrepresenting to clients that voluntary disclosure (as opposed to streamlined) is only for people facing potential criminal penalties.
Getting Into IRS Offshore Compliance
It is human nature to want to avoid making a proactive submission to a government agency such as the IRS before the IRS ever discovers the non-compliance. But, typically that is best path forward.
Moreover, if you realize you are out of compliance and begin researching online, you may begin to feel as though it is hopeless. Some of these attorneys and CPAs make it appear that everyone with unreported assets or income is going to be severely penalized and shipped off to prison.
That is simply not the case.
You have options, and depending on the facts and circumstances of your situation, your options may include the streamlined program, reasonable cause, or the delinquency procedures – which may result in significantly reduced fines and penalties (and may even receive a penalty waiver).
Golding & Golding, A PLC
We have successfully represented clients in more than 1000 streamlined and voluntary disclosure submissions nationwide, and in over 70-different countries.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe.