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How to Find an OVDP Attorney

Houston Tax Attorney

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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

  1. 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.
  2. 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.
  3. 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.

Capital gains tax on sale of primary residence before entering USA on immigrant visa

Houston Tax Attorney

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Hello, 

I am sponsoring my parents in India for their green cards. 

(1)Do new immigrants become liable for US taxes on being granted an immigrant visa OR do they become liable after they enter the country on an immigrant visa and acquire a green card 
(2)If they sell their primary residence in India prior to entering the US on the IV do they owe an US capital gains tax 

Thanks 

The would not be taxed in the US on foreign sourced income unless they are considered to be US residents. A person becomes a US resident for tax purposes by meeting one of the following tests: 1.) lawful permanent resident test or 2.) substantial presence test. 

A person becomes a lawful permanent resident when they are issued a green card by USCIS (Form I-551) and enter the country. After this point, they are taxed on worldwide income as US residents. 

There are other variables that makes it impossible to give you any specific advice in this type of forum, but that is the general rule. Even if they do sell the home after establishing US residency, there may be exclusions on capital gains available.

-Law Office of Kunal Patel, LLC

I am an international student on an F1 visa. Do I also pay taxes in the US?

Houston Tax Attorney

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I rely entirely on my parents for my upkeep, so I don’t have a job. I’m currently working towards graduating next year. I don’t want to owe taxes to your government, my government owes my dad a lot of money which makes it much harder for me to pursue my education here. I don’t want to owe taxes in addition to school fees and medical bills.

As long as you were on an F-1 visa the entire time in the US, you’re exempt from counting your US presence days for purposes of the substantial presence test for up to 5 years. No taxes unless you have US sourced income.

-Law Office of Kunal Patel, LLC

Should I file W-8BEN form if I am an L2 visa holder and work?

Houston Tax Attorney

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I have been in the U.S. for the last two years on L2 visa and started working half a year ago. I have recently opened a savings account at a bank and received W-8BEN form from them shortly afterwards with a request to confirm my non-resident alien status. I must be a non-resident alien for INS but what about IRS? I have SSN and pay taxes in the U.S. which probably makes me a resident alien for tax purposes. Should I decline to file W-8BEN? If yes, what kind of information should I provide to the bank?

You do not need to fill out a W-8BEN since you are a US resident for tax purposes also. You need to fill out a W-9.

 -Law Office of Kunal Patel, LLC

What is the tax implications of selling a home in india and moving the proceeds to the US?

Houston Tax Attorney

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My mom a greencard holder and myself a US Citizen jointly own a home in india estimated around 300,000usd we bought the home 15 years ago for 100,000usd. My mom has lived in the home for the most recent 15 years but now is moving to the US permanently. What is the tax implications if we transfer $300000 to a US bank account. Do we pay taxes on the gain in the US?

It’s not the transferring of the money that causes it to be a taxable event; it’s the underlying transaction. You pay capital gains tax when the property is sold. In addition, if the transaction causes a foreign currency gain, then you would have that gain to report also. For example, if the house was under mortgage, you may have currency gain on the foreign repayment of the mortgage when you sell it. You can bring the $300000 to the US whenever you want as long as you report the sale on your US tax return as well as any interest you earn if you deposit the funds in an Indian bank.

-Law Office of Kunal Patel, LLC

As a non-resident alien, owning a company overseas, am I subject to U.S income tax?

Houston Tax Attorney

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I have an L-2 non-immigrant visa, leave in is the US and own a small Limited Company located in Hong Kong. 

Am I subject to US income tax if I make profits? What if I take a Director remuneration?

If you’re the only member of the LLC, then all gross income or net profits (depending on whether you made an S-corp election) flow to your personal return. Since you are a US resident, then it’s likely that income will be subject to US income tax. If there are more than one members in the LLC and some of the members are not US persons, then their pro rata share of the profits might not be subject to US tax, assuming the income earned by the LLC is not effectively connected to US trade or business. If the income is taxable in the US, you would be able to claim a foreign tax credit if you also paid tax in the foreign jurisdiction. You should contact an attorney specializing in this area for advice.

-Law Office of Kunal Patel, LLC

Can I claim foreign earned income exclusion for nonresident alien spouse?

Houston Tax Attorney

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My wife was in US on a J-1 with 2 year home stay rule and has been in Vietnam since 2015. We elected to treat her as a U.S. resident for 2015 tax purposes – this is a rolling election so it will continue for our 2016 taxes. 

According to IRS Publication 54 (https://www.irs.gov/publications/p54/ch01.html#…) we cannot claim that she is not a U.S. resident under any tax treaty: 
“Nonresident Alien Spouse Treated as a Resident 
 
This means that neither of you can claim under any tax treaty not to be a U.S. resident for a tax year for which the choice is in effect.” 

However, (A) can we still claim a Foreign Earned Income Exclusion for her using the physical presence test? (B) If so, and she ends up with no taxable income for 2016, can I still contribute $5,500 to her 2016 Roth IRA as long as we meet all other criteria (joint income limits, my income being >$11,000 per year, etc.)? 

Thank you!

It sounds like you made a 6013(g) election for your spouse. If so then she is a resident for tax purposes. Short answer is yes to (A). Not sure about (B) without additional facts.

-Law Office of Kunal Patel, LLC

 

What are the tax implications of expatriation (giving up green card)?

Houston Tax Attorney

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H1B holder, have just started the green card application process via my employer, so that my wife can work on her H4, but only intend to stay in the US for a few more years. I am concerned that this may affect my tax bill after I leave the US in ~3 years time. 

Section 887A (“exit tax”) applies to covered expatriates. Covered expatriates are US citizens and long-term residents. Long-term resident is defined under the code as an individual who has held a green card in at least 8 of the 15 years ending with the year of expatriation. So it does not appear that you would be affected by Section 877A.

– Law Office of Kunal Patel, LLC

Do I have to pay tax on inherited cash from parent overseas?

Houston Tax Attorney

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I am a US citizen who inherited cash asset of $300K from my father this year. My father is a citizen of Bangladesh and his money is not related to US or US law in any way or manner. According to IRS law, do I have to pay any tax on this cash asset?

There’s no tax on a foreign cash inheritance, but there are definitely some reporting requirements. FBAR, Form 3520, and FATCA are just some of the reporting requirements you may have.

-Law Office of Kunal Patel, LLC

What are the implications on estate tax for property acquired from a foreign parent (who is not a US resident)

Houston Tax Attorney

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Parent in India, if the children living in the US as citizens or permanent residents inherit the parents’ property in India, do they need to pay estate taxes in the US.

No but you may be required to file Form 3520 and other information reporting forms. The penalties can be severe for not reporting on these forms so be sure to conduct your due diligence or hire a tax attorney or a CPA that specializes in expat/inpat tax.

-Law Office of Kunal Patel, LLC