Why Work with a ‘Remote’ Offshore Tax Attorney Specialist?

When it comes to certain types of tax law, international tax law (and more specifically, offshore disclosure) is a very complicated, complex, and nuanced area of law. There are not many Board-Certified Tax Law Specialists nationwide who specialize exclusively in offshore tax. This can be a challenging situation for certain taxpayers who reside in a state without local offshore tax specialists. Oftentimes, a taxpayer in one of these states or foreign countries will have to rely on a specialist who is located out of state ‘remotely’ but represents taxpayers nationwide and worldwide. While this may be uncomfortable for certain taxpayers who prefer to meet in person with a local attorney, it is important to understand the benefits of working with a remote offshore tax attorney specialist and how these ‘challenges’ are easily overcome.

Difficult to Find a Board-Certified and Offshore Specialist

There are probably fewer than a handful of international tax law specialists who have more than 20+years of international tax law experience, are Board-Certified Tax Law Specialists in at least one state (even if they practice exclusively in IRS offshore disclosure), and dedicate their entire practice to offshore disclosure and compliance. These days, any attorney can claim they are an expert, but unfortunately, these types of false misrepresentations can put taxpayers into precarious positions when it comes to making their submission to the IRS. That is why taxpayers should be cautious in using a local attorney who is not sufficiently experienced in this area of tax.

Inexperienced Local Counsel Leads to More Problems

While having an attorney working with you outside of your immediate location can pose some challenges, they are relatively minor and can be easily overcome. It is a much worse issue for a taxpayer to choose an experienced local counsel (solely because they are local) only to have them make an incorrect submission to the IRS, which can put the taxpayer into a bad position with the Internal Revenue Service and the U.S. government. Especially with the way the administration is operating these days, the taxpayer must make the most persuasive and accurate submission they can on their first go around.

No In-Person Meetings with the IRS are Required

There are typically no in-person meetings with the IRS when it comes to offshore disclosure, which also means there is no requirement that the tax attorney and the client meet in person. In other words, in-person meetings are not required for this type of tax law.

No Court or Litigation Appearances Necessary

Finally, when it comes to offshore disclosures, such as the streamlined procedures, delinquency procedures, reasonable cause, or VDP, the IRS does not require the taxpayer to meet with the IRS in person. Thus, since there is no meeting in person with the IRS officer or agent, there is no need to have an attorney that is located in your immediate location — especially if it means that you were going to retain a less experienced offshore disclosure lawyer simply because they were in a location in closer proximity.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and/or other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist Taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Late-Filing Disclosure Options

If a Taxpayer is out of compliance, there are various international offshore tax amnesty programs that they can apply to safely get into compliance. Depending on the specific facts and circumstances of the Taxpayers’ noncompliance, they can determine which program will work best for them.

*Below please find separate links to each program with extensive details about the reporting requirements and examples.

Streamlined Filing Compliance Procedures (SFCP, Non-Willful)

The Streamlined Filing Compliance Procedures is one of the most common programs used by Taxpayers who are non-willful and qualify for either the Streamlined Domestic Offshore Procedures or Streamlined Foreign Offshore Procedures.

Streamlined Domestic Offshore Procedures (SDOP, Non-Willful)

Taxpayers who are considered U.S. residents and file timely tax returns each year but fail to report foreign income and/or assets may consider the Streamlined Domestic Offshore Procedures.

Streamlined Foreign Offshore Procedures (SFOP, Non-Willful)

Taxpayers who are foreign residents may consider the Streamlined Foreign Offshore Procedures which is typically the preferred program of the two streamlined procedures. That is because under this program Taxpayers can file original returns and the 5% title 26 miscellaneous offshore penalty is waived.

Delinquent FBAR Submission Procedures (DFSP, Non-Willful/Reasonable Cause)

Taxpayers who only missed the FBAR reporting and do not have any unreported income or other international information reporting forms to file may consider the Delinquent FBAR Submission Procedures — which may include a penalty waiver.

Delinquent International Information Returns Submission Procedures (DIIRSP, Reasonable Cause)

Taxpayers who have undisclosed foreign accounts and assets beyond just the FBAR — but have no unreported income — may consider the Delinquent International Information Return Submission Procedures. Before November 2020, the IRS was more inclined to issue a penalty waiver, but since then this type of delinquency procedure submission has morphed into a reasonable cause request to waive or abate penalties.

IRS Voluntary Disclosure Procedures (VDP, Willful)

For Taxpayers who are considered willful, the IRS offers a separate program referred to as the IRS Voluntary Disclosure Program (VDP). This program is used by Taxpayers to disclose both unreported domestic and offshore assets and income (before 2018, there was a separate program that only dealt with offshore assets (OVDP), but that program merged back into the traditional voluntary disclosure program (VDP).

Quiet Disclosure

Quiet disclosure is when a Taxpayer submits information to the IRS regarding the undisclosed foreign accounts, assets, and income but they do not go through one of the approved offshore disclosure programs. This is illegal and the IRS has indicated they have every intention of investigating Taxpayers who they discover intentionally sought to file delinquent forms to avoid the penalty instead of submitting to one of the approved methods identified above.

Current Year vs. Prior Year Non-Compliance

Once a Taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, Taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.

**Need Help Finding an Experienced Offshore Tax Attorney?**

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for Taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.

*This resource may help Taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.

Contact our firm today for assistance.