Awards & Recognition
The IRS is getting more aggressive towards taxpayers with unreported taxable income from foreign assets, foreign financial accounts and foreign information reporting noncompliance every day. Honest mistakes that have caused these taxpayers to fall out of compliance with international tax code are being discovered because of FACTA mandated reporting by your offshore financial institution where they might have otherwise gone under the radar in years past. With that in mind, now is the time to get the seasoned eyes of legal counsel on your international tax filing history to get you back into compliance in a fashion that minimizes additional tax, penalties and interest and successfully avoids criminal tax prosecution.
Fortunately, if you do have tax misstatements or delinquent filings for international assets in years past, there are avenues where you might resolve your noncompliance issues at minimal cost while avoiding harsh penalties or potential prison time. By entering into the appropriate voluntary disclosure program, you can take the weight of concern over an impending government investigation off of your shoulders.
The dual licensed International Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing are waiting on your call. We can be the ally that you need when taking on the federal government and IRS agents who are hoping to score points off your past mistakes. To hear more about the services that we can offer you, call us today at (800) 681-1295 or click here to schedule a reduced rate initial consultation.
International Tax Law: Page Content at a Glance
Many people are surprised to learn that those with American citizenship, but who are living outside the country, may be subject to paying taxes in the United States. This can be a confusing situation, as some people may be subject to double taxation, paying taxes both in the United States and in their current country of residence. Tax treaties differ from country to country, which further complicates the situation. Offshore information reporting requirements are also quite daunting.
The IRS has multiple tools available to help it track income that U.S. citizens and tax residents earn in foreign jurisdictions. It also can track assets held overseas or in foreign banks for those with American citizenship, that hold green cards or meet the substantial presence test.
If you are facing a complex tax situation involving international income generating assets, offshore businesses or other foreign earnings, contact the Tax Law Offices of David W. Klasing today. We are a team of Tax Attorneys, CPAs and EAs in a law firm experienced in international tax law, so you can count on our experience and knowledge.
Tax Planning, Audits, and Compliance for American Expatriates and Businesses
Today, business affairs extend beyond domestic borders to a global market. The Tax Law Offices of David W. Klasing is committed to helping U.S. and international businesses capitalize on opportunities domestic and abroad with minimal international tax law implications. As businesses have expanded into global markets, more and more individuals are also working and conducting business overseas.
Experienced legal counsel from an international tax attorney can help individuals working abroad or retiring overseas maintain their citizenship through fulfilling their tax obligations. International tax attorney David W. Klasing has extensive experience in international tax planning, offshore tax controversies, and foreign account compliance. At the Law Office of David W. Klasing, our tax professionals can assess an array of tax concerns related to double-taxation of expatriates, tax minimization, FBAR, FATCA, and other international tax problems.
Learn more about expatriate tax obligations and international estate planning.
Table of Contents
- Tax Planning for American Expatriates and Businesses
- Can Non-U.S. Residents Face an IRS Audit?
- Understanding FBAR and FATCA
- How Do I Fix International Tax Mistakes?
- How Do I Minimize International Tax Liabilities?
- U.S. Tax Reporting Obligations for International Businesses
- How Does an International Tax Attorney Help?
- International Tax FAQs
Can Expats and Non-US Residents face an IRS Audit or a Foreign Tax Audit?
Many U.S. citizens who are non-residents are surprised to learn that the U.S. government taxes on the basis of their citizenship. They are further surprised to learn that the foreign nation in which they reside taxes on the basis of traditional notions of physical presence and where the economic activity occurred. Therefore, many expats are surprised to learn that they can be subject to double-taxation absent careful consideration of tax treaties and engaging in subsequent tax planning. Expats who fail to satisfy their tax obligations can indeed be audited by the IRS. You may even owe the U.S. government taxes or required reporting if you are not or have never been a U.S. citizen but own or control assets that originated or exist currently in the United States. We have helped expats living in many nations address their tax concerns and problems including:
- Ecuador– As a picturesque nation with a rich culture and affordable cost of living, many American Expats choose to retire to Ecuador. We can help you protect your retirement savings from double-taxation.
- Hong Kong– Hong Kong is attractive to many individuals who are pursuing a career in finance. We can handle the FBAR, FATCA, and other tax considerations.
- Luxembourg– Luxembourg is a cosmopolitan nation that is also an attractive place to live and work for many financial professionals.
- Mexico– As the United States’ southern neighbor, many Americans have significant financial and business ties to Mexico. Americans living in Mexico or engaged in cross-border banking or business activities should regularly consult with an experienced tax professional.
- Philippines– American expats may settle in Manilla or elsewhere in this welcoming nation. The location of the Philippines can provide an expat with access to an array of markets in Asia.
- Saudi Arabia– Many Americans and Westerners live and work in the Saudi Arabia in enclaves in cities like Riyadh, Jeddah. Frequently US citizens come to live and work in Saudi Arabia due to opportunities in the oil and hydrocarbon industries.
- Singapore– Singapore is a nation and city-state known for its both its high cost of living and multitude of economic opportunities.
- Switzerland– As a traditional home to many banks and banking operations, Switzerland is attractive to a certain class of financial planners and other professionals. However, individuals residing in Switzerland must be especially wary of tax compliance errors due to targeted enforcement efforts stemming from FATCA and the Swiss Bank Program.
- United Kingdom– As a traditional financial hub, London and the entirety of England and the U.K. provides American expats with opportunities within the framework of a remarkably familiar culture.
We can provide tax planning and compliance services for American expatriates to avoid tax penalties. Tax planning for expats typically includes ensuring that past tax filing and payment obligations have been satisfied, minimizing double-taxation, and assessing FBAR, FATCA, or other informational reporting requirements. We can reconcile your international tax obligations to avoid the imposition of an IRS audit or a foreign tax audit.
Requirements to File FBAR and FATCA
Numerous tax enforcement efforts aimed at stamping out offshore tax evasion has expanded the reach of U.S. taxing authorities. In recent years, the IRS and Department of Justice have focused on enforcing the long-standing obligation to disclose foreign accounts and assets as part of a Report of Foreign Bank and Financial Accounts (FBAR). Furthermore, the IRS and DOJ have worked to implement international governmental agreements (IGAs) as part of FATCA with more than 100 nations that will allow for the sharing of financial account information. Furthermore, additional enforcement efforts like the Swiss Bank program and John Doe Summonses have provided U.S. regulators with significant foreign account data to identify and pursue U.S. citizens, tax residents, and other covered individuals.
In recent years, the government has sought John Doe Summonses against banks and other financial institutions to elicit large swathes of financial information on taxpayers. These tools allow for the government to penetrate the previously clandestine walls of these institutions against classes of potential offenders, even if they don’t have a particular violation in mind when they institute the investigation. The legality of the criteria that the courts use to grant these summonses is highly debated, but as of now, this is a recognized and valid weapon in the war chest of the IRS that they are happy to deploy at will in the interest of uncovering tax evasion schemes.
If you are a foreign national in the United States or a U.S. citizen living at home or abroad and you hold significant foreign assets in excess of $10,000 it is likely that you have foreign disclosure obligations. Even mere mistakes can be punished harshly, so it is essential to obtain experienced international tax planning and FBAR compliance services. At the Tax Law Offices of David W. Klasing, my legal team and I are committed to helping you remain compliant with U.S. and international tax laws. We will apply our understanding of international tax treaties to help you maintain your citizenship with minimal tax burdens.
Are OVDP and Streamlined Disclosure a Solution to Fix International Tax Mistakes?
Taxpayers who have made mistakes regarding the disclosure of a foreign account under FBAR can face a penalty of either $100,000 or half of the value of the undisclosed assets in question, whichever is greater. In many circumstances, these penalties apply even for accidental errors. A penalty for a mistaken failure to file an FBAR is only forgivable (still with minor fines) if the taxpayer had no obligation to file an FBAR in the years prior to the failure and if their general compliance with tax code in other areas suggest that the taxpayer had been reasonably compliant otherwise. If your error was intentional or a voluntary disregard of a known legal duty, penalties are even harsher and can consume a significant portion of the foreign account balance. However, if you have not yet come under suspicion, you may be able to reduce or eliminate the penalties you face.
Taxpayers can utilize Offshore Voluntary Disclosure to correct FBAR concerns when they believe that their noncompliance may have been willful. However, taxpayers who may have been negligent, careless, or even grossly negligent may qualify for the Streamlined Disclosure Program. While individuals who qualify for Streamlined Disclosure face less onerous filing requirements and penalties (no penalties for non-US residents), this form of relief might not provide protection if the IRS determines your actions were, indeed, willful.
For this reason, you will want to identify whether you are a valid applicant for the domestic or expat Streamlined Disclosure program before filing any amended returns or giving the government any information that they could use against you. Therefore, it is wise to discuss your matter with an experienced International Tax Lawyer before taking any action.
How Can U.S. Companies, Foreign Corporations, and International Businesses Minimize International Tax Liabilities?
Whether you are part of an international, multinational, or a U.S. business, one of your top priorities is to avoid double-taxation and other forms of excessive taxation. Consider, for instance, a hypothetical foreign entity seeking to perform business in the United States. At a minimum, considerations regarding the form the entity should take should include:
- Tax treatment of the entity. Depending on the entity type, different tax treatment will apply. Selecting among an LLC, C Corporation, S Corporation, or tax treatment as a disregarded entity will produce significantly different tax results. In addition, choice of a business entity includes liability considerations.
- Liability considerations. Entity selection also concerns issues of liability should the business run into problems and accrue debts and other obligations.
- Formation and administration of the entity. The goals of the entity should be considered thoroughly to ensure that the costs and procedure involved in forming, administering, and managing the entity are justified.
- Capital considerations. Depending on the business’s need for outside investment and other factors, parties should consider how the form of organization may make it easier or more complex to raise capital and the compensation contributing individuals and entities should receive.
- Exit strategy – Whether there is a chance that the business will exit the market or that shareholders and partners may move on to other ventures, considering the financial and tax impact of these events is necessary.
Often due to concerns about liability, the choice often boils down to whether more advantageous tax treatment would result from a corporate form or from an LLC being treated as a disregarded entity. Corporate entities in the United States are subject to the corporate tax rate. The rate begins at 15% but quickly escalates to a rate of 34 percent for profits realized above a $75,000 threshold. Companies that elect treatment as a disregarded entity must ensure that such a choice is justified because disregarded entities are treated as if they are a branch of the foreign parent entity. One important consideration is whether this type of structure will allow for adequate flexibility in controlling the timing of the imposition of the branch profits tax.
My Los Angeles international tax law team and I understand the tax treaties the United States has with several other countries. We will apply our taxation knowledge to protect your business from double taxation. Whether you are part of a domestic or foreign business, we will help your business remain compliant with U.S. tax laws and any applicable international tax.
Tax Reporting Obligations for International Businesses
The exact nature and extent of a foreign corporation’s tax reporting obligations are dependent upon its status as either a domestic U.S. corporation or a foreign corporation doing business in the United States. For example, a foreign-owned domestic corporation is obligated to file Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business. In addition, corporations of this type are required to keep sufficient records regarding related parties.
In contrast, a foreign corporation engaging in business in the United States may not be a reporting entity per §6038A. This determination is guided by whether the foreign corporation has established a permanent presence in the United States and relevant tax treaties. Furthermore, multinational companies and corporations should remain cognizant of the possibility of transfer pricing penalties.
The Roles of an International Tax Attorney
When you entrust the Tax Law Offices of David W. Klasing with your tax strategy needs, you gain the benefit of an experienced international tax lawyer and a seasoned CPA for the price of one. Prior to becoming a tax attorney, Mr. Klasing worked for nine years as an auditor in public accounting. After gaining a master’s degree in taxation, he became a Certified Public Accountant (CPA). As a dually certified tax attorney and CPA, Mr. Klasing’s in-depth working knowledge of federal and state tax codes and regulations is frequently invaluable in assisting individuals and both U.S. and international businesses develop effectively and strategic tax planning solutions.
How Can an International Tax Advisor Help?
The dual licensed Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing are uniquely equipped to help you in your international tax law compliance efforts. Having our firm by your side is more important today than ever.
The IRS has ramped up their efforts to investigate and prosecute overseas tax evasion schemes. Using recent legislative efforts from the Biden administration, the federal government’s tax watchdog has increased their budget, added manpower to their workforce, and modernized their technological sophistication. These three factors combined allow for more audits and investigations with sider scopes and longer timelines.
This change has also prompted the IRS to be more motivated to pursue prosecutions for suspected wrongdoing. The government’s investment in closing the tax gap only makes sense if they make enough money to cover the initial investment. Therefore, the IRS is tasked with rewarding the government for their faith by imposing more substantial fines in a lot more circumstances. This makes it substantially more likely that taxpayers with offshore assets will find themselves the target of an IRS criminal tax investigation or foreign account tax audit than ever before.
Our international tax advisors can help you avoid this unfortunate outcome in three stages. First, we can provide you with a thorough assessment of your past and current tax situation to identify areas of domestic and international noncompliance that should be dealt with immediately. Second, we can work with you to identify the most lucrative strategies for solving these outstanding issues with the least amount of pain and exposure to you or your business. Third, we can advocate for you when, and if, the IRS assesses heavy fines and threatens jail time for your honest mistakes.
For International Tax Planning, FBAR Compliance, and IRS and Foreign Tax Audits, Work with a Strategic Tax Lawyer
If you are looking to live abroad or operate a business overseas or bring a foreign company to the United States, obtaining experienced international legal counsel is the first step to a prudent approach. The Orange County and Los Angeles-based international tax lawyers at The Law Offices of David W. Klasing are committed to helping you avoid any unnecessary domestic or foreign tax burdens. We are also proud to assist expats, tax residents, non-residents, and businesses in maintaining all tax reporting and payment obligations. To schedule an initial, reduced-rate consultation call us at 800-681-1295 or online today.
Why You Should Hire a Dual Certified International Tax Attorney and CPA
Add the full dual-licensed tax attorney and CPA infographic to your website.
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #1
Confidentiality
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #2
Managing Liability
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #3
Negotiation Skills
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #4
Financial Expertise
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #5
Avoiding Conflicts
Why Hire a Dual Licensed International Tax Attorney & CPA, Reason #6
Saving Money
Common International Tax Questions
What Is International Tax Evasion?
When a U.S. taxpayer illegally places money in overseas accounts in an effort to avoid paying taxes that are due in the United States, he or she could be subject to civil and criminal tax penalties in the United States. The accumulated funds offshore often flow from offshore unreported inheritances, investments, real estates or business activity. Where foreign information reporting and income tax reporting is purposefully not complied with in order to illegally evade U.S. taxation, international tax evasion occurs.
Using international accounts, rather than having your money in the United States, isn’t necessary illegal, as long as you are in compliance with the income and foreign information requirements of both the United States and in the country where the money resides. This process of using legal means internationally to minimize your tax liability is called tax avoidance.
If you need to hold or place some money outside the United States, an experienced tax attorney can help you do so in a manner that will reduce the possibility of drawing civil or international tax evasion penalties.
What Do International Tax Attorneys Do?
When you have a company that operates in multiple countries around the world, your company must be able to juggle the tax laws in each of those countries. When you consider how complex the tax laws are in the United States, the confusion grows exponentially when dealing with laws in multiple other countries at the same time.
That’s where an experienced international tax attorney can provide an invaluable service. The attorney will give you the help you need to set up a smart and legal financial and business plan for your company that is expanding from the U.S. offshore, or seeking to do business in the U.S. from offshore. The tax attorney also will team with any foreign tax counsel of your choosing to keep you abreast of any pertinent tax law changes around the world, helping you update your business plan in real time to stay in international tax compliance and to avoid international taxes where possible.
What Is International Taxation?
For those people or companies that have money, investments or business activity in a foreign country and in the U.S., they may owe taxes on that income in more than one jurisdiction. The method by which you plan to minimize any double taxation will affect the ultimate amount of taxes you have to pay.
As international taxation laws are complex by nature, trying to keep all of the information straight from country to country can be challenging. That’s where an international tax attorney is able to provide help by making sure you or your company are in compliance and are legally reducing worldwide taxation. By being well versed in U.S. tax law and its international taxation aspects, an international taxation attorney can help ensure you’re minimizing your worldwide tax burden by coordinating with the foreign tax counsel of your choosing.
What Types of International Taxation are There?
Much like in the United States, individual countries in the world have a variety of taxation methods.
For individuals, one common type of international taxation involves personal income tax for both citizens and foreigners who earn money inside the country. Some countries even will tax money its citizens earn in foreign countries.
The international taxation laws for corporations vary quite a bit from country to country, leading to complexity. Tax rates can also vary quite a bit for business owners operating in multiple countries. An international taxation attorney can provide the advice you need to protect as much of your income as possible, whether you’re operating as an individual or as a company.
What Are the Differences Between a Domestic Tax Attorney and an International Tax Attorney?
A domestic tax attorney in California primarily focuses on tax-related issues at the state and federal levels. Such professionals provide legal advice, plan, and offer services related to tax obligations within California and the U.S., encompassing personal income, sales, corporate, and estate taxes. Guiding clients on California-specific taxes like franchise and alternative minimum taxes also falls under their purview. Furthermore, domestic tax attorneys advise selecting optimal business entity types (LLC, C Corporation, S Corporation) to achieve tax efficiency and appropriate liability considerations.
In contrast, an international tax attorney, in addition to the offering the services above, specializes in helping clients navigate the U.S. complexities of international tax law. The value of their expertise increases significantly in light of heightened scrutiny from tax authorities on offshore assets and activities. Clients benefit from their assistance in understanding tax obligations under international tax treaties and U.S. laws like the Foreign Account Tax Compliance Act (FATCA). They also facilitate compliance with Foreign Bank and Financial Accounts (FBAR), extend their knowledge to international estate planning, and assist in minimizing double taxation.
When it comes to business operations, international tax attorneys guide firms – U.S. companies, foreign corporations, or multinational entities – on how to structure their businesses strategically for tax minimization. They support selecting the most tax-efficient entity type, weighing aspects like liability, capital requirements, and exit strategy. Understanding the tax treatment of LLCs, C Corporations, S Corporations, or disregarded entities is critical to this process.
These professionals also assist with international tax reporting obligations. For example, they help foreign-owned domestic corporations comply with filing requirements like IRS Form 5472. They also counsel foreign corporations on U.S. reporting obligations, considering whether a permanent presence in the U.S. has been established and if tax treaties apply. In addition, they offer guidance to companies aiming to avoid potential transfer pricing penalties.
At the Tax Law Offices of David W. Klasing, the team combines the expertise of domestic and international tax attorneys with CPAs. This unique blend of skills aids in ensuring compliance, identifying lucrative strategies for tax minimization, and advocating for clients during tax disputes. Additionally, our association with top international firm Marc Schwartz, a dually licensed International Tax Attorney, and CPA, enriches our capability to address the federal and offshore implications of international tax and estate planning and compliance.
How much will the services of an international tax attorney cost?
At the Tax Law Offices of David W. Klasing, our international tax attorney’s services offer both upfront and long-term value. You’ll gain the expertise of an international tax attorney and a CPA for a single price, a cost-effective solution for complex international tax matters. Our billing reflects an hourly rate, which ensures efficient delegation of your case within our team.
The professional relationship begins with a reduced-rate one-hour initial consultation conducted virtually or by phone. This conversation helps us understand your international tax needs and discuss the financial commitment. Depending on your case’s complexity, additional sessions may be needed.
We strive to limit travel-related costs, resolving international tax issues primarily through correspondence or relocating your case to a local office when possible. David Klasing’s private pilot license enables us to reach local client locations (within 500 miles of Irvine California) without passing these costs on to our clients.
Beyond the direct costs, we emphasize the long-term value our team provides. Skilled international tax attorneys can help prevent costly errors that may lead to additional tax assessments while ensuring the smooth navigation of international tax disputes. We only accept cases where we can significantly improve your situation and justify our fees.
We are also proud to assist ex-pats, tax residents, non-residents, and businesses in maintaining all tax reporting and payment obligations. To schedule an initial, reduced-rate consultation, call us at 800-681-1295 or online today. We offer several consultation options: a quick 10-minute phone consult for $75, a reduced-rate 60-minute virtual meeting for $450, and a 60-minute phone consult for $425. Please allow a 15-minute window following the appointment time for us to start the session or call. Any excess consultation time paid for but not received will be refunded.
Do international tax laws change or update?
Indeed, international tax laws frequently change and evolve. This can be due to various factors, including new legislation, policy shifts, court rulings, or updated domestic and international regulations. These changes can influence tax treaties, foreign investment rules, cross-border trade regulations, and reporting requirements for foreign income and assets.
Tax authorities like the Internal Revenue Service (IRS) in the U.S. regularly issue new guidelines, rulings, and interpretations that clarify existing laws or introduce new ones. Court decisions also play a crucial role, as they can set legal precedents that influence tax law interpretation and enforcement.
The international tax environment’s dynamic nature necessitates keeping current with these changes. We are committed to staying abreast of these shifts at the Tax Law Offices of David W. Klasing in California. Our comprehensive blog provides regular updates on changes in international tax laws, ensuring our clients stay informed about any potential impacts on their tax planning or compliance.
Our team proactively adjusts our strategies to align with changes in the international tax landscape. As international tax laws evolve, we reassess our approach to offer the most effective & compliant solutions. Therefore, engaging a tax attorney like those at David W. Klasing’s office is beneficial, who stays informed about ever-changing international tax laws to ensure you remain compliant while minimizing your tax liability.
