Is Your CPA Using a Tax Organizer with Foreign Account Questions?
While a simple Tax Organizer may be a useful tool for your CPA or Enrolled Agent (EA) to help prepare your IRS taxes, it can be a major roadblock in trying to move forward with certain IRS Voluntary Disclosures – especially if you were willful.
- 1 What is a Tax Organizer?
- 2 Does Your Tax Organizer Ask About Foreign Accounts?
- 3 Were the Questions in the Tax Organizer Clear?
- 4 Everyone is Non-Willful…
- 5 Here are 5 Important Considerations
- 6 Don’t Dig an Even Deeper Hole…
- 7 Manafort Gets Convicted
- 8 We Specialize in Safely Disclosing Foreign Money
- 9 Golding & Golding, A PLC
What is a Tax Organizer?
A Tax Organizer is a questionnaire (or packet) used by Tax Professionals to help collect data about your taxes. It may ask questions such as:
- Copies of W-2s
- Copies of Receipts
- Copies of 1099s
- A List of Questions about your tax situation
Does Your Tax Organizer Ask About Foreign Accounts?
Typically, if the Tax Organizer asks about Foreign Accounts, the questions will be along the lines of the following:
- Do you have accounts outside of the U.S.?
- Do you have assets outside of the U.S.?
- Do you have investments outside of the U.S.?
- Do you have income from outside of the U.S.
Were the Questions in the Tax Organizer Clear?
As a Board-Certified Tax Law Specialist, we work on many different types of IRS Voluntary Disclosure cases. And, oftentimes, we are referred cases after an inexperienced attorney (less than 10-15 years of private practice) touted themselves as “experts,” only to have the client comes to us in a panic – once the reality sets in that their Attorney knows little to nothing about the complexities of IRS Voluntary Disclosure, and was trying to make a quick sale that left the client in danger.
Everyone is Non-Willful…
Unfortunately, some people are willful.
While some attorneys believe they can convince anybody that their client was non-willful (they can’t) and that if they were willful, they should go Streamlined because the IRS will never find them (they shouldn’t) – you have to try to keep your wits about you, and not make any bad decisions based on attorney bravado (aka salesmanship)
Do not let inexperienced counsel sell you on a false bill of goods.
For a case study example of what happens when you go streamlined when you are willful, click here.
Here are 5 Important Considerations
1. Did You Write “No” For Foreign Accounts (short questionnaire)?
If you speak and read English, the questionnaire was short, and the questions were clear, you are in a tough spot – but there may be wiggle room. If, for example, the Organizer asked about foreign accounts, but you only have foreign life insurance or other asset(s) which are not conventionally considered to be “accounts,” there may be some room for ambiguity.
2. Did You Read/Complete the Full (Long) Questionnaire?
You’re busy, right? We have many clients who relocate to the U.S and are provided tax equalization services from their employer –which usually includes free CPA services from a big 4 accounting firm for the first two years.
Sometimes, these firms send you a 60-page questionnaire, and who has the time to read one of those all the way through….
If you only got through the first few pages, and then next 30 pages didn’t apply to you, then maybe you did not read the questionnaire all the way through (and the foreign questions were further into the questionnaire) — maybe you can show non-willfulness.
3. Did You Understand the Questionnaire?
Maybe English is not your first language and there was some confusion about the call or context of the questions.
4. Did the Accounts Belong to your Spouse?
Maybe you are the boring one in the relationship, tasked with handling the taxes. And, if all of the foreign accounts belong to your spouse, and you do not think of that money as yours, then it may not have occurred to you when you completed Tax Organizer to include the accounts (presuming your spouse did not read the Tax Organizer either.)
5. Don’t Let Inexperienced Counsel Lead You Astray
We’ve seen it first hand. A client contacts us and/or other experienced counsel and explains that they were willful and wrote note “No,” in response to foreign accounts in a tax organizer. They want to get compliant, but are afraid of OVDP (we understand).
The individual then speaks with inexperienced counsel, who tells them not to worry about it. (Good old, newbie attorney Bravado)
In one situation, we spoke with an individual who was convinced to go Reasonable Cause even though he was admittedly willful. The Attorney (a self-proclaimed “Expert”) was only in Private practice for only a few years, and was so eager to make a sale, that the Attorney actually told a person to go Streamlined or Reasonable Cause (after the individual stated he was sure he was willful) because the IRS will never catch him.
This was despite the fact that:
- English was the individual’s first language
- The questionnaire from the CPA firm is in English
- The individual speaks English
- The CPA speaks English
- The individual completed all the questions on the questionnaire (so obviously the individual read it)
- When it comes to the foreign account questions, the individual marked no.
- When it comes to the foreign income questions, the individual marked no.
- When it comes to foreign asset questions, the individual marked off no.
…and the individual had all the above.
Don’t Dig an Even Deeper Hole…
Picture it: You are sitting across from the IRS Auditor in an audit, and wondering how to explain that even though you speak English, the questionnaire is in English, and your CPA speaks English – that somehow you didn’t understand these particular sets of questions about foreign accounts, income, investments, real estate, etc. and instead put no (automatic reflex?) — but you understood the rest of the questionnaire enough to answer the other non-foreign account related questions just fine.
So, what do you say now when the IRS agent asks you how you were non-willful… “(Gulp!) Because… my attorney said I could still go Streamlined because the chances of you finding me were low.”
Hmm… It will be hard for your Attorney to represent you while he or she is facing an ethical inquiry from the State Bar.
Manafort Gets Convicted
People do get convicted, and people do go to jail. Of course, not everyone does, but it does happen.
Don’t give the IRS more fuel for the fire.
After Manafort’s conviction, we received many inquiries about the same few firms that seemed to have employed this strategy of selling willful people into streamlined to make a quick buck.
These individuals face very real risk of Tax Fraud and Evasion penalties, which can also mean loss of freedom (aka Prison).
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.
Golding & Golding, A PLC
We have successfully represented clients in more than 1,000 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.