Houston Tax Attorney
What is an OVDP Lawyer?
While there’s really no such thing as an “OVDP attorney” or “OVDP lawyer“, a client with unreported foreign income and assets might search for “OVDP Lawyer”, so many tax attorneys who specialize in this field will call themselves OVDP lawyers. So basically, an OVDP lawyer is one who has specialized skill and knowledge in bringing clients with unreported foreign income and assets into compliance with U.S. laws.
What are the Typical Fees for an OVDP Attorney?
While I can only speak from my experience and my discussions with other attorneys I know that practice in this field, I would say that 95% of cases are streamlined cases vs. OVDP. An OVDP client is a rarity. Very few offshore non-compliance cases rise to the level of willfulness and need the protection of the OVDP program. I cannot provide an accurate range for OVDP cases because they vary so much in complexity.
Streamlined cases, on the other hand, are often the same fact pattern. Client, a native of country X, moves to the U.S. and leaves behind some foreign accounts in country X. They might open a few more foreign accounts while in the U.S. Sometimes they have family they are supporting through funds in the foreign accounts. These are almost always streamlined cases because the behavior is not willful, or at least not demonstrably willful. If your situation is similar and your attorney wants you to file under the OVDP, get a second opinion! I have had dozens of clients with this exact same scenario, including some with assets in the millions, and all have been successfully resolved through streamlined procedures.
Fixed fees. For attorneys that charge fixed fees, I would expect the total fees in most streamlined cases to be between $2,000 to $5,000, including the tax returns. Like most tax attorneys, I do not prepare tax returns, but I contract the tax return preparation to tax preparers who have experience in foreign account reporting. I’ve had to exceed $5,000 where the client had dozens of accounts, significant mutual fund investments, or owned foreign companies. If you own foreign mutual funds or demat accounts, you can expect to pay higher fees. The attorney you choose should be able to explain how they arrived at the fees they are quoting you. Be careful hiring an attorney who just throws a figure out there without first reviewing your account. If the attorney provides you with a quote at the end of your 15 minute phone evaluation, that should be a warning sign. After a 15-20 minute initial phone call, I send out a FBAR/FATCA organizer for the client to fill out. I carefully review the tax returns and organizer and determine the work that needs to be done; only then am I able to provide a fee estimate.
Hourly. Hourly billing may make sense for OVDP cases. In streamlined cases, most of the work falls upon the tax preparer, whereas an OVDP case will involve significantly more of the attorney’s time. Attorneys who practice in this field charge anywhere between $200 to $500/hr, although I’ve seen upwards of $750/hr. Usually the tax preparation work will be fixed and the attorney’s time will be billed hourly. The hourly fee is not so much as important as what the total fees will be (a lesser experienced attorney might bill at $200/hr and spend 2 hours, where as an experienced one billing at $400/hr might spend 1 hour). You should try to get your attorney to pin down a range of what he expects your total costs to be.
The total cost will also depend on factors such as firm size and location. You could expect fees to be higher in high cost of living areas such as NY or California. Large firms may also have higher overhead.
Do I Need a Tax Lawyer, or can I use a CPA?
Read more about the differences between JDs and CPAs. Your communications with attorneys are privileged but not with CPAs (they have limited privilege). If you have a simple case that has no evidence of willfulness, you may not need that protection.
Then there’s also the matter of competence. As an attorney, I do not have training or experience in preparing tax returns. Therefore, I leave such work to an accountant. A CPA is not trained to handle legal issues. Therefore, a CPA should not be consulted in a legal matter where you could be facing civil or criminal penalties for a tax violation.
How do I Choose an OVDP Attorney?
Here are a few tips that might help you choose:
- Does that person have experience in handling offshore compliance matters? Before you contact an attorney, do your research first. Spend a few hours researching OVDP blogs and the IRS website about the various offshore compliance programs. Understand the process and various international forms required for your situation (e.g., FBAR, 8938, 8621, 3520, 5471, 1116, 2555). When you talk to an attorney, test them. Ask them to explain the process and what forms they think will be required for your matter. If that is in line with your research, you can be a little more assured.
- Ask about the person who will be preparing your tax return. In streamlined cases, the tax preparer plays a bigger role in the case than in an OVDP case. The attorney’s job in a streamlined case is to make the initial determination of willfulness vs. non-willfulness, coordinate with the tax preparer, and draft the certification of non-willfulness. The quality of the tax returns will depend upon the person preparing the tax returns. That person should have several years of experience in “expat tax.” The preparers we use have many years of experience working at Big 4 accounting firms in expat tax.
Tips and Etiquette for Clients
- Be Respectful of your Attorney’s Time. There is nothing wrong with price shopping, but you should be mindful of the attorneys’ time. While you should not be pressured into signing an engagement letter, you should not expect multiple consultations without signing an engagement letter. And even after signing the engagement letter, try to consolidate your questions and phone calls to prevent multiple contacts. Attorneys would much rather be working on your case than fielding phone calls and emails. A flat fee does includes reasonable but not unlimited contact with your attorney.
- Be Upfront During your Initial Consultation. This means truthfully and completely answering all of the attorney’s questions. It is important to identify any weak links in your case so that they may be addressed early on.
- Be Organized. If you’re paying hourly, then obviously good organization on your part will save you money. If your attorney is charging a fixed fee and does not sense that you are organized, you can expect that your fees might be higher to reflect the additional time commitment on the attorney’s part.