Wish You Never Went OVDP?
You are not alone. At Golding & Golding, we focus our entire tax law practice on Offshore Voluntary Disclosure. In fact, we are one of maybe a handful of law firms worldwide focusing exclusively in the are of IRS Offshore Voluntary Disclosure. We have represented individuals in over 50 countries, with single disclosures exceeding $35,000,000 and have helped many people avoid a potential criminal investigation.
With that said, in 2017, alone we have received an inordinate number of new clients who had retained prior counsel, were pressured or “forced” into OVDP by unscrupulous counsel (when they should have gone streamlined), and now want to find a way out.
Be Cautious With Big Firms “Scaring You”
Chances are you are not going to prison for your unreported foreign accounts, and it is probably not even an option for the IRS to launch a Criminal Investigation against you.
Nevertheless, unfortunately, there are some bad apples in the world of IRS Offshore disclosure. Namely, Attorneys, CPAs, and Accountants who do not have near the amount of experience that they advertise, selling unsuspecting taxpayers into OVDP (Offshore Voluntary Disclosure Program) instead of the Streamlined Program to make a quick buck…at your expense.
Why Push OVDP instead of Streamlined?
The reason why many law firms will push OVDP, even in situations in which it is obviously not warranted is because of the fees they can charge. First, these firms will generally charge an hourly fee instead of a flat fee, so that they can run up your tab early in the process. Second, because there is a lot more required to complete an OVDP as opposed to a Streamlined application, the fees will be much higher. Moreover, by time you realize how high the fees have become, you are already knee-deep in an OVDP submission – and are scared and unsure how to proceed.
Here are a few tips to help you from the early stages of your investigation:
Fear of Going to Prison
Let’s face it, none of us want to go to prison – especially if your crime is tax related. It usually does not stir up much fear amongst other inmates when you arrive on the block to know your crime consisted of unreported foreign accounts. Therefore, many attorneys will use “fear tactics” such as the fear of going to prison to push you into OVDP — even when it is not warranted.
The fact of the matter is the IRS only prosecutes a few thousand criminal cases each year. And, those cases are usually the worst of the bunch and involve real crimes. If you knowingly and/or willfully (a.k.a. intentionally) failed to report your foreign accounts and foreign income, and you are considering offshore disclosure, then you should enter OVDP. If you are non-willful and were unaware of the requirement to do so then you should be careful to not let your fear get the best of you.
How can I Know if I am Willful or Non-Willful?
Yes, it is impossible to determine with certainty whether the IRS will determine if you are willful or non-willful, but consider this. The IRS does not provide a concrete definition of the terms willful or non-willful.
With that said, this is when you have to use your common sense and go with your gut. As we stated above, if you knew what you were doing but assumed you would never get caught – only to have recently learned about the updated international tax compliance laws (a.k.a. FATCA) and/or you received a letter from your foreign bank asking you to certify your US status – then you are willful and you should submit to OVDP or make alternate plans.
Whether you know it or not, it is much more common to have unreported foreign accounts simply because you were unaware of the requirement to do so. In these cases, chances are (absent willful blindness) you are non-willful and should not be bullied into OVDP.
Fixing the Problem – Hiring a New OVDP Attorney
If you have lost confidence in your current attorney and/or believe you were pushed into OVDP when you believe in your heart and mind that you are not willful then you do not have to continue with your current representation. It does not look bad or suspicious to the IRS that you hired new representation. You have every right to fire or terminate your current attorney, seek a refund of unused funds or improper overcharges that were made against your retainer, and seek a new attorney.
You only get one chance at offshore disclosure, and while nothing is guaranteed, it is important that if nothing else you are confident in your representative to stand by your side.