Willfulness vs. Non-willfulness

Foreign Nationals & Expats

Houston Tax Attorney


Willfulness vs. Non-willfulness: Offshore Compliance Cases Involving Immigrants

Nearly on a daily basis I get a call or email from a potential client with this almost exact same scenario:

Client from Country A moves to the U.S. and leaves behind some accounts and assets in Country A. Client finds out about FBAR filing requirements and learns that foreign income must be reported on the U.S. return. 

Client finds out about FBAR filing requirements and then embarks on an online research journey. He might stumble upon one of my articles, or an article on another attorney’s website. Such articles are about offshore compliance cases generally and not necessarily about situations like the one this client finds themselves in. Some articles might indicate the disastrous consequences of non-compliance such as imprisonment, revocation of passports, or issues with their green card application.

These are theoretically all possibilities. However, there are no cases I am aware of where the IRS has taken such drastic actions against the type of client I write about here. The amount of foreign assets might be high in some cases, but the unreported income is small. This is what the IRS looks for (and don’t believe anyone who tries to convince you otherwise!) Some attorneys will discredit anyone who speaks out against their fear tactics.  Read on my blog about some cases (fortunately not mine) that have been prosecuted civilly and criminally by the IRS. You’ll quickly see that the fact scenario described in this article is nothing like those cases. Your assets are not in “bad” countries (i.e., tax havens like Switzerland, Cayman, etc), you have business/personal ties to the country where your assets are located (i.e., the country you emigrated from), and the amount of unreported income is low.

I have successfully represented many immigrant clients in streamlined programs, with assets reaching into the millions. It should be noted that these involved cases where the client was clearly non-willful.

Watch out for Unethical Lawyers

If your income level is high enough and you can afford their exorbitant fees, some unethical lawyers will suggest that you make a voluntary disclosure under the Offshore Voluntary Disclosure Procedures (OVDP) even where your behavior was non-willful,  so they can justify the fees they charge for their services. The OVDP is for those with potential risk of criminal or civil prosecution. If you’re not a wealthy immigrant, these attorneys may turn you away and tell you to go find a CPA. Such advice would surely put into question that attorney’s ethics.

They may present themselves as “experienced litigators”, and yet, they may advertise on Google and elsewhere seeking out these run-of-the-mill non-willfulness cases to make a mountain out of a mole. These experienced litigators might tell you that if you checked the wrong box on the organizer and speak English, you’re automatically willful!

You’re hiring an attorney and an advocate. Not an accountant. An attorney’s job is to fight unequivocally for the client, not to throw the client under the bus because they checked the wrong box on their tax return. If there’s enough plausible doubt as to willfulness, any attorney worth their salt should be able to advocate for you. Remember, the burden of proof is on the Government to show willfulness.

I’ve successfully filed dozens of streamlined returns. We have no rejections, audits, or any other issues resulting from streamlined applications. We maintain relationships with other reputable attorneys in this area of tax to keep our knowledge current.

If you immigrated to the U.S. with foreign assets located in your native country and an attorney recommends that you file OVDP, contact me for a 2nd opinion. I am not afraid of the IRS; I understand the IRS. I’ve worked for the IRS as an auditor and was in the hiring process for a criminal investigator position before I left the Service for a private industry career. I know what types of cases criminal investigators work on – serious tax evasion crimes, money laundering, narcotics-related financial crimes, and counter-terrorism. They do not go after immigrants who may have a few thousand dollars of additional taxes owed on their returns, regardless of the value of the offshore account. I will do what’s in your best interests, not what will produce the most fees. You need an advocate that is practical and effective, not a fear monger.

That said, if any client admits they are willful or if the evidence clearly indicates they are, I will not represent that client under the streamlined procedures.