Unhappy with Your Current Offshore/Voluntary Disclosure Lawyer?

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Offshore Disclosure Attorney – International Tax Lawyer, Sean M. Golding (Board-Certified Tax Law Specialist)

Unhappy with Your Current Offshore/Voluntary Disclosure Lawyer?

Were you sold (or scared) into making an Offshore Disclosure by a newer attorney (10< years of private practice) who you later learned was too inexperienced to handle your disclosure?

Now that you are asking the attorney more specific questions about your disclosure, are the answers getting less specific and more unclear?

Or, did you retain a more “experienced” attorney you presumed had tons of experience (because he or she had grey hair and maybe even worked at the IRS), but have come to realize the Attorney really doesn’t know too much about Voluntary Disclosure?

Don’t worry — you still have options.

Golding & Golding

We specialize in IRS Voluntary Disclosure, including OVDP and Streamlined Disclosures.

We realize that over the last year, and especially during the last few months before OVDP terminated, there was a mad dash to enter OVDP.

From August through September, our Attorneys communicated with hundreds of people who were about jump feet first into OVDP — when many of them really didn’t need it.

Nevertheless, some of the more aggressive attorneys scared and goaded these unsuspecting individuals in OVDP, just to make a quick buck – without properly explaining the process, compliance period, and of course — the penalty structure.

Alternatively, some people were pushed, or “swindled” into Streamlined when the attorney knew the client was willful. In addition, these attorneys failed to tell the client that while OVDP would be ending, Streamlined was not going anywhere at the present time…

You can read a cautionary tale here about going Streamlined when you Willful.

You Can ALWAYS Change to a New Lawyer – It is Your RIGHT

If you happen to be one of the many individuals, entities, trusts or estates stuck in OVDP or in the process of having counsel prepare a Streamlined Application, it is important to note — you can always change your attorney.

If you feel like you jumped into voluntary disclosure with the wrong attorney, and have lost faith in your counsel, you should research the market more, speak with multiple different attorneys at different firms — and  get a better idea of what you need, and then re-asses your situation.

A Few Major Mistakes We See Often

Here are some of the more common mistakes we see when someone comes to us after having retained prior counsel who flubbed the offshore disclosure:

No Opportunity for Opt-Out

Some attorneys who take you OVDP, do it because they can get away without having to worry about an audit. And, since many of these attorneys have no audit, litigation, or trial experience — they do it to charge you more by scaring you into giving up your rights “to avoid going to jail forever.”

Therefore, since they have no idea how to litigate or handle an audit, they will not even present the opportunity to you – that you may be able to opt-out and significantly reduce their penalties.

While for some people it is not the right strategy, it is crucial that as a person that is within OVDP is at least be presented with chance to assess their options to assess if Opt-Out is right for them.

Incorrect Penalty Calculation

This seems to be a problem with both Streamlined and with OVDP. With OVDP, we see clients come to us after they went to a prior attorney and found that no FAQ 55 (Retirement Waiver) arguments were made, or that double-counted money was not “accounted for.”

In addition, we have seen other situations in which a person submitted penalty money for money that was not even their own money.

On the flip-side, with Streamlined, we find that the Attorney included personally held real estate, did not include foreign life insurance, or failed to account for PFIC excess distribution calculations.

No Opportunity for Reasonable Cause instead of Streamlined Domestic

For many people, there is a comfort level with going Streamlined Domestic, paying a 5% penalty and receiving an IRS acknowledgement (it is not really an issue with Streamlined Foreign, since with Streamlined Foreign a person receives a Full Penalty Waiver and was not required to have filed ‘timely’ tax returns.)

For some people though, they may be in a better position to go Reasonable Cause and seek a penalty waiver.

It is an individualized strategy based on each person’s facts and circumstances, number of accounts, value of accounts, source of the money, type of investments, etc – and it is crucial that you go through the analysis of Reasonable Cause vs. Streamlined, along with the pros and cons before making a final decision.

What Type of Attorney Should I Hire?

IRS Voluntary Disclosure is a specialized area of law. An IRS Voluntary Disclosure is a complex undertaking. It requires the coordination of several moving parts, including strategy development, Tax Preparation, Legal Analysis, Negotiation and more.

You should hire a Tax Attorney who has the following credentials:

  • ~20 Years of Private Practice experience representing his/her own clients
  • Experienced in Criminal and Civil Tax Litigation
  • Experienced representing clients in Eggshell and Reverse Eggshell Audits.
  • Advanced Tax Degree (LL.M.)
  • Preferably a Board-Certified Tax Law Specialist

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

Who Decides to Disclose Unreported Money?

What Types of Clients Do we Represent?

We represent Attorneys, CPAs, Doctors, Investors, Engineers, Business Owners, Entrepreneurs, Professors, Athletes, Actors, Entry-Level staff, Students, Former/Current IRS Agents and more.

You are not alone, and you are not the only one to find himself or herself in this situation.

Sean M. Golding, Board-Certified Tax Law Specialist

Our Managing Partner, Sean M. Golding, Board-Certified Tax Law Specialist  earned an LL.M. (Master’s in Tax Law) from the University of Denver and is also an Enrolled Agent (the highest credential awarded by the IRS, and authorizes him to represent clients nationwide.)

Mr. Golding and his team have successfully handled several hundred IRS Offshore/Voluntary Disclosure Procedure cases. Whether it is a simple or complex case, safely getting clients into compliance is our passion, and we take it very seriously.

He is frequently called upon to lecture and write on issues involving IRS Voluntary Disclosure.

Less than 1% of Tax Attorneys Nationwide are Board-Certified Tax Law Specialists 

The Board-Certified Tax Law Specialist exam is offered in many states, and is widely regarded as one of (if not) the hardest tax exam given in the United States for practicing Attorneys. Certification also requires the completion of significant ethics and experience requirements.

In California alone, out of more than 200,000 practicing attorneys (with thousands of attorneys practicing in some area of tax law), less than 350 attorneys are Board-Certified Tax Law Specialists.

Beware of Copycat Law Firms

Unlike other attorneys who call themselves specialists or experts in Voluntary Disclosure but are not “Board-Certified,” handle multiple different areas of tax law, purchase multiple keyword specific domain names, and even practice outside of tax, we are absolutely dedicated to Offshore Voluntary Disclosure.

*Click here to learn the benefits of retaining a Board-Certified Tax Law Specialist with advanced tax credentials.

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 you discover 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 programs.

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:

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