Five Myths About Foreign Account Disclosures

Five Myths About Foreign Account Disclosures 

Five Myths About Foreign Account Disclosures: When a US Person has overseas bank or investment accounts, and they have not properly complied with IRS international information reporting requirements — it can be a scary ordeal. Making the matter infinitely more worse is the insurmountable amount of fear-mongering Taxpayers will find online regarding what the US government is going to do if they discover overseas accounts before they have a chance to get into compliance. While enforcement is clearly on the rise, it is not the wild west; it’s tax law. Thus, it is important to try to stay levelheaded when spelunking through all of the nonsense you come across on the World Wide Web.  Here are five myths about foreign account disclosures:

Every Foreign Account Disclosure Lawyer is an Expert

It seems like every Tax Attorney or CPA with a few hundred disclosures under their belt is a Self-Proclaimed Expert Attorney in foreign account disclosures. Just because a person claims they are an expert, does not make them an expert. Just like simply working at the IRS (which has more than 100,000 employees) in a non-attorney or non-offshore disclosure position does not make someone an expert in overseas reporting. The closest any tax professional will come to being an expert is becoming a Board-Certified Tax Attorney Specialist — which is usually a good place to start when researching different attorneys to consider for tax and legal representation for your offshore disclosure.

Foreign Account Disclosures are Easy

Reporting late or previously undisclosed overseas money is one of the most complicated aspects of tax law — it involves two components: reporting and taxation. While not all disclosures are overly complicated — there are many landmines and hidden traps to be concerned about for any submission to the IRS.

Hourly vs Flat-Fees for Tax & Legal Representation

Nearly all experienced Offshore Disclosure lawyers charge flat-fee rates for both Tax and Legal Representation. Foreign Account Disclosure hourly billing normally results in exorbitant tax and legal fees.

All Late Foreign Account Disclosure Filing is Willful

It is not uncommon for some attorneys to flood the internet with false information about what happens when the IRS finds you. They want you to believe that once you are caught, the IRS will send you away to prison — and throwaway the key; this is of course, not true. When you see this type of information online, you have to take a step back from this nonsense and think to yourself  — does this sound accurate?  In reality, most late reporting involves non-willful behavior and a mere lack of knowledge of the foreign disclosure requirements, which is typically relatively straight-forward to resolve.

Everyone is Accepted into the Streamlined Program

The IRS Streamlined Procedures are used by non-willful taxpayers in order to get into compliance for previously undisclosed offshore accounts, assets, investments, and income. Even though a person may be non-willful (or believe they are non willful), each year we get approached by many Taxpayers who utilized inexperienced counsel to try to submit to the Streamline Program  — and were denied from entering the program.

Foreign Account Disclosure Amnesty Program Summary

Foreign Account Amnesty Programs are programs developed by the Internal Revenue Service to assist Taxpayers who are already out of compliance for non-reporting.

Some of the more common programs, include:

• Voluntary Disclosure Program (VDP or “New” OVDP)
• Streamlined Domestic Offshore Procedures
• Streamlined Foreign Offshore Procedures
• Delinquency Procedures
• Reasonable Cause

Can I Just Start Filing Foreign Accounts This Year Instead?

No, unless the current year is the first-year you had an Foreign Account Reporting requirement. If you had a prior year reporting requirement, but only begin to start filing in the current year (Filing Forward) it is illegal. In the world of offshore disclosure, this is referred to as an Quiet Disclosure. The IRS has warned taxpayers that if they get caught in a Quiet Disclosure situation, it may lead to willful penalties and even a criminal investigation by the IRS Special Agents.

Our International Tax Lawyers Represent Clients Worldwide

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

Contact our firm today for assistance.