Foreign Nationals & Expats
Houston Tax Attorney
- 1 How much does a Streamlined Case Cost?
- 1.1 Do you Need OVDP or Streamlined?
- 1.2 Tips for Hiring an OVDP Lawyer
- 1.3 Do I Need a Tax Lawyer, or can I use a CPA?
- 1.4 Can we just Forget about my past Non-Compliance, and file Correctly Going Forward?
- 1.5 Client Etiquette
- 1.6 Why Choose Us for your Offshore Compliance Matter?
How much does a Streamlined Case Cost?
OVDPs are a rarity compared to streamlined cases. It is quite rare for a case to have the willfulness elements that require such a drastic solution. We’ve had clients call us after speaking to other tax practitioners who recommended they file under OVDP where the recommendation made no sense. It was overkill. We’d like to believe the attorney was doing what they thought was right, and not that they were recommending unnecessary procedures to pad their fees. Unfortunately, we often hear the same stories about the same few practitioners. In one case, the client was recommended to file OVDP where the client’s non-compliance was only in one year and it was relatively minor. Read Stephen Dunn’s book on offshore accounts compliance to hear about some of his similar experiences.
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. These are almost always streamlined cases because the behavior is not willful, or at least not demonstrably willful.
Fixed fees. Some attorneys charge fixed fees. They can be higher where the client has large number of accounts, significant mutual fund investments, or owns foreign companies. The attorney you choose should be able to explain how they arrived at the fees they are quoting you.
Consumers often judge the quality of a product or service based on the cost, assuming higher cost with higher quality, or vice versa, lower cost with lower service. This is not a reliable way to choose an attorney. Get a breakdown of the cost and determine if it is commensurate with the amount of work involved.
Some attorneys spend a substantial amount of money advertising on Google ads. These marketing and advertising costs are eventually passed onto the client. Google advertising can be very costly – sometimes up to $50 or more per single click. Here’s an example below. When you search for a phrase in Google such as “tax attorney” you’ll see some links at the top with a green ‘ad’ next to it the URL link. When you click on the website, the firm is charged a fee by Google. These firms can easily spend tens of thousands a month on Google ads. We had a client from one firm who was charged well over $10,000 for a single (simple) tax return. Unless the IRS commissioner himself was preparing the tax return, I would find that outrageous!
Hourly. With attorneys who use the hourly billing model, usually the tax preparation work will be fixed and the attorney’s time will be billed hourly. The tax preparation work might be done by a different firm. 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, whereas 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.
Do you Need OVDP or Streamlined?
The Offshore Voluntary Disclosure Program (OVDP) is for taxpayers who need protection from criminal prosecution or civil willfulness penalties. However, many OVDP attorneys, either through lack of experience or perhaps so they can charge more for the case, recommend OVDP to their clients. Read more about OVDP vs. Streamlined.
If you don’t have major risk factors, such as the following in your case, get a second opinion if any attorney recommends OVDP.
- Location of accounts in tax havens. Do you have legitimate business or personal ties to the jurisdiction where your foreign assets are located? Or are they located in offshore tax havens such as Switzerland, Panama, Cyprus, Liechtenstein, Luxembourg, Austria, Singapore, and others where there are bank secrecy laws? This is a major red flag.
- The amount of unreported taxable income. Having a large offshore account in itself is not a major risk factor, assuming the source of that money is from legal sources. The IRS’s concern is not the amount in the account, but the unreported taxable income. We’ve successfully brought clients into compliance who have several million in offshore accounts through streamlined procedures. In these cases, even though the amount in the foreign accounts were sometimes in the millions, the tax loss to the government wasn’t much – it was a few thousand dollars of tax on the unreported foreign interest income. This is not large scale tax evasion that requires protection against criminal and civil prosecution, absent other factors.
- Using holding accounts. Those that are trying to willfully evade taxes will often use offshore holding accounts or “DBAs” to obscure the true legal ownership of the account.
Tips for Hiring an OVDP Lawyer
#1 Find out how much access you’ll have to the attorney. Some attorneys have high volume practices and will be minimally involved in your case. Your case might be assigned to an inexperienced attorney at the firm.
#2 Focus on the big picture. After you’ve done your preliminary research about the OVDP and streamlined process, stop there. The more you continue to read about offshore criminal prosecutions and attorney blogs, the more you’ll worry yourself unnecessarily.
#3 Check your attorneys prior experience. Some of the more knowledgeable ones have prior experience in public accounting or working at the IRS. You want to be sure they didn’t just graduate from law school and decide to hang up a shingle. A one year LLM education hardly qualifies anyone to understand complex tax matters.
#4 Before you contact an attorney, do your research first. Review 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 you should then better be able to judge if they’re experienced in such matters.
Do I Need a Tax Lawyer, or can I use a CPA?
A CPA should not be consulted in a legal matter where you could be facing civil or criminal penalties for a tax violation.
Can we just Forget about my past Non-Compliance, and file Correctly Going Forward?
Our job is to bring clients into compliance safely and will not advise or assist you in your strategy of “going forward compliance.”
- Be Respectful of your Attorney’s Time. There is nothing wrong with shopping around, 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 includes reasonable but not unlimited contact with your attorney.
- Be Upfront During your Initial Consultation. This means truthfully and completely answering all 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.
Why Choose Us for your Offshore Compliance Matter?
I come from several years of diverse tax experience, having worked at the IRS, public accounting, and law.
Some firms who specialize in offshore compliance boast about the hundreds of cases they handle each year. It makes you wonder – how much time is the attorney really spending on your matter? Each case is unique and you deserve to have someone listen to and understand your particular situation. We are not and do not strive to be a high volume practice.
We have a 100% success rate with our streamlined submissions. In addition, we’ve saved clients hundreds of thousands in misc. offshore penalties through various types of penalty abatement.