Voluntary Disclosure Preclearance: The Voluntary Disclosure Preclearance Letter is now an IRS requirement under the updated IRS Voluntary Disclosure Practice. Under the previous version of the program (OVDP), preclearance was not mandatory. Fast-forward to 2020, and now the IRS preclearance letter is mandatory. Moreover, the Internal Revenue Service has developed a pre-printed form (revised Form 14457) to submit the letter. Under the prior OVDP, form 14457 was also used as part of the submission – but it was not used as a mandatory pre-clearance letter. While the VDP process is more complex than the streamlined procedures, many taxpayers simply do not qualify for the streamlined or delinquency procedures. And, with the IRS enforcement of foreign accounts compliance at an all-time high, VDP is a good option for taxpayers.
Voluntary Disclosure Preclearance
The IRS Voluntary Disclosure Preclearance process is relatively straightforward. The IRS requires only basic information about the offshore accounts in the preclearance letter. The form asks for personal information used to identify the taxpayer, such as social security number, address, and passport information — along with the list of accounts and assets.
How Long Does it Take for the IRS Respond?
Under the new procedures, the IRS is (usually) taking several months to respond. This has many benefits to the Taxpayer, including allowing the Taxpayer time to financially prepare for the submission.
Is the New Updated Voluntary Disclosure Program Good for Taxpayers?
Yes, the voluntary disclosure program is a great option of taxpayers who were willful, and do not qualify to go streamlined. While the penalties may be higher in some regard, they may also be negotiated (not applicable in prior OVDP, absent an opt-out). Moreover, international information return penalties may be waived, and overall the taxpayer may fare far better than they would have under prior OVDP.
Don’t’ Be Misled by Inexperienced Counsel
IRS Voluntary Disclosure is a specialty area of law, and should be handled by a Board-Certified Tax Law Specialist.
Each year, we inherit cases from clients who first went to less-experienced counsel, who oversold and underperformed. Typically, these attorneys are general tax practitioners, with some experience handling entry-level streamlined cases. They are not dually-licensed in Tax (EA or CPA) and Law — and (unfortunately) will oftentimes place the unsuspecting taxpayer into a worse position than when the taxpayer first started the process.
These attorneys tend to deter taxpayers from entering voluntary disclosure, even if the taxpayer was willful. Rather, they manipulate them into submitting to the Streamlined Program – even when they know the taxpayer was willful – which can have a far-reaching impact on the client’s finances and freedom.
Speak with Experienced Tax and Legal Counsel
When a person is willful, they become ineligible to apply for the Streamlined Program. To complicate matters further, willfulness in offshore civil matters does not require knowledge (willful blindness) or intent (reckless disregard).
You only get one bite of the apple.
Golding & Golding: About our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.