Foreign Account Tax Audit Representation
I regularly provide foreign account tax audit representation to represent clients under audit or criminal investigation concerning foreign bank accounts and related unreported foreign income generating activity.
The IRS’s concerted effort to vigorously pursue taxpayers with unreported interests in foreign accounts and income generating assets / entities has never been higher. When it comes to financial crime investigation in this area no stone will be left unturned. Governmental actions taken to address a perceived lack of compliance in this arena include international cooperation agreements, as well as several recent legislative and regulatory initiatives. All this is to say, the best chance of successfully navigating a foreign accounts, assets or entities audit is by having a knowledgeable and experienced tax attorney on your side.
The Internal Revenue Service is a proverbial alphabet soup of specialized departments of highly skilled and trained personnel in forensic accounting, data mining, interrogation, and criminal and civil prosecution. Where foreign accounts, assets and entities are concerned it is not unusual for a taxpayer’s case to cross the desks of the Criminal Investigation Division, IRS Office of Chief Counsel, and the United States Department of Justice. A thorough and in depth understanding of the roles of each of these players is vital to achieving a positive outcome.
Foreign Account Audits
Dealing with an audit of a foreign account, asset or entity can be a complicated task. My audit representation approach is designed to effectively reduce or eliminate the criminal and civil penalties stemming from the audit, regardless of whether the audit results from a simple mistake (negligence) or egregious purposeful actions (willfulness). Several factors go into the examiners decision to refer a case for criminal prosecution (willfulness) or to impose a civil penalty (negligence). By having knowledge of those factors I can formulate a comprehensive strategy to reduce the likelihood of a prosecutorial recommendation and assessment of heavy civil fines. I will achieve this by aggressively undertaking extensive due diligence and exploring all manners of resolution.
The unrepresented taxpayer in the foreign account, asset or entity is his or her own worst enemy. Examiners make their living on giving taxpayers just enough rope to hang themselves by roping them into making incriminating statements. To increase exposure in this practice area even more, the Fifth Amendment privilege against self-incrimination has been rendered inapplicable when foreign accounts are involved through the “required records” exception. Under the required records exception, a taxpayer’s Fifth Amendment rights are not violated where foreign account records are subpoenaed even though the act of producing them is incriminating if: 1) The government’s inquiry is essentially regulatory; 2) the information is a preserved record of a kind customarily retained; and 3) the records have taken on public aspects making them analogous to a public document.
Closing procedures vary depending on the results of the examination and there are different closing procedures depending on whether there is no violation, a violation without penalty, negligence or a non-willful violation, a willful violation, or a referral to Criminal Investigation. Only a tax attorney with specific expertise in this area will be able to clearly communicate the ramifications of these circumstances in a clear and concise manner so you are able to make the most informed decision possible.
What’s more, if a resolution is proposed but not agreed to, the taxpayer’s only recourse is through the internal appeals process. The U.S. Tax Court has in no uncertain terms declared it does not have jurisdiction to review the IRS’s decision to impose an FBAR penalty because the IRS is not required to issue a statutory notice of deficiency before assessing the FBAR penalty. This means to exhaust your rights and all available avenues, you need an advocate with a longstanding history of working with the Service and its often convoluted practices and procedures.
Questions and Answers About Foreign Tax Audits
- Does the Fifth Amendment apply to foreign accounts?
- How is evidence cultivated from foreign sources?
- How is tax loss determined?
- How might an FBAR audit be resolved?
- Is a penalty assessment ripe for judicial review?
- Overview of an administrative criminal investigation
- What is the process of an FBAR referral?
- Statute of Limitations raised during a FBAR audit?
- Precautions to be taken in the pre-audit phase
- Recent international tax and reporting prosecutions
- Foreign account, entity and investment prosecution
- Who collects restitution and penalties?
- International tax investigations are an IRS high priority
Experience in Navigating Foreign Account, Asset and Entity Tax Audits
At the Orange County, San Diego and Los Angeles County Tax Law Offices of David W. Klasing, I work diligently to provide extensive protection and tax help for clients that have been notified of a pending tax audit. My work over the past 20 years as a Tax Lawyer and a CPA, Master’s Degree in Taxation, extensive experience with the foreign account voluntary disclosure programs and experience with tax audits and criminal investigations surrounding foreign accounts and FBAR filings, assets and entities has given me the knowledge and experience needed to effectively combat IRS charges in this practice area thus saving you money and much more terrifying ramifications such as incarceration.
Our Office has developed a national practice as to federal income tax issues administered by the IRS, so no matter what state you are from, if you are presently under audit, or you will be shortly concerning a foreign account, asset or entity, we can help provide audit defense by simply moving the audit to an IRS field office local to one of our offices. Few attorneys are competent to handle the complexities of taxation and criminal exposure within the context of this type of audit or criminal investigation. It is sometimes said that while the focus of an accountant is accuracy, the focus of an attorney is advocacy. Our Office’s expertise and training combines both fields: We place a premium on both accuracy and client advocacy.
Contact Our International Tax Audit Attorneys
Tax law attorney and CPA David W. Klasing has an advanced degree in tax law (Master of Science in Taxation) and is prepared to negotiate on your behalf in a tax audit, or if need be, in federal and state tax courts. He is prepared, experienced and preeminently qualified to fight on your behalf from the initial stages of an audit through to any necessary appeals processes and litigation if necessary.
As a CPA and an attorney, I can provide foreign account tax audit representation to you throughout the audit process. I won’t need to refer you to legal counsel; I have the experience and knowledge of the audit process to offer confident representation myself. My representation can help save you money, not just from increased tax payments or fines, but also in legal and CPA fees since you only pay one individual for both services.