Opinions and Legal Insights

Tax Preparation for Streamlined Offshore & Attorney-Client Privilege

Tax Preparation for Streamlined Offshore & Attorney-Client Privilege

Tax Preparation for Streamlined Offshore & Attorney-Client Privilege

Attorney-Client Privilege Tax Return Preparation in Streamlined Cases

Tax Prep for Streamlined Offshore & Attorney-Client Privilege: International Tax Law is extremely hard, and Streamlined offshore disclosure submissions are deceptively difficult. The reason why legal representation is crucial in all phases of the tax submission, is because the IRS tax and legal complexities are hopelessly intertwined with one another.

For example, the legal complexities of PFIC (Passive Foreign Investment Companies), GILTI (Global Intangible Low-Taxed Income), Foreign Trust Reporting and many offshore tax compliance issues cannot be easily parsed out from the tax preparation portion of the submission.

US v Abrahams & Tax Return Preparation Privilege

When it comes to tax return preparation in tax/legal matters, the Abrahams case helps explain how the process works, and the limited reach of the IRS in legal issues pertaining to tax preparation.

In Abrahams, the Attorney also handled Tax Preparation for his clients.

Abrahams is an attorney who prepares income tax returns for his clients, and also represents many of them in disputes with the Internal Revenue Service before the Tax and Claims Courts. 

The IRS wanted lots of his documents.

The summons demanded that Abrahams produce “[a]ll documents relating to the preparation to income tax returns for others for [1978 to 1984],” and included a nonexclusive list of six categories of materials.Abrahams’ protestations at a hearing before the district court exposed two ambiguities in the language of the summons.

First, if “relating to” is read very liberally, the summons covers all the material for Abrahams’ Tax and Claims Court litigation, since these cases “relate to” what was claimed on clients’ tax returns.”

The Attorney Claimed Privilege, and the IRS disagreed.

Abrahams asserted below that all the information demanded by the IRS was protected against disclosure by the attorney-client privilege.

The government claimed that none of it was.”

Court Held Legal Communications could be protected.

“For its part, the IRS argues that the questionnaires information is automatically unprotected because the clients completed the questionnaires in order to allow Abrahams to prop rare their returns.

We cannot fully accept that contention. Although communications made solely for tax return preparation are not privileged, communications made to acquire legal advice about what to claim on tax returns may be privileged.”

5 Risks to Using an Outside CPA in Streamlined Offshore Cases

Here are some of the common issues we find when a Streamlined Offshore Filing has been referred to an outside Tax or CPA Firm.

Most CPAs and Tax Professional do Not Specialize in International Tax

The majority of CPAs and EAs do not specialize in International Tax.

Rather, they handle various different areas of tax.

And, if you find a good accountant that specializes exclusively in this area of tax, their fees are usually comparable with the Attorney, but it does not include the attorney-client privilege.

Legal Complexities of PFIC and Foreign Trust Reporting

PFIC (Passive Foreign Investment Company) and Foreign Trust Reporting is very complicated.

Oftentimes, when a CPA receives a Streamlined Case with these issues, they will immediately refer the case out to a legal specialist team to protect the client.

If your Attorney is referring you to a CPA for these types of matters, be sure they are qualified and interview the CPA as well before engaging the firm and they explain what Kovel is (and isn’t).

Kovel provides no protection for tax return preparation.

The lack of Attorney-Client Privilege

There is no Attorney-Client Privilege with a CPA.

Anything you tell the CPA can be discovered by the IRS.

The Attorney Misrepresented Kovel

Kovel is not statutory law.

It does not cover tax return preparation.

It is limited in scope and can be rejected by the Courts.

The Attorney is not a Board-Certified Tax Specialist with Advanced Tax Credentials

Being Board-Certified is the highest designation a tax lawyer can receive.

Just claiming to be a tax specialist or that an attorney “specializes” is little more than a marketing tool.

Heck, even the IRS uses the term “Tax Law Specialist” to designate entry-level, non-substantive tax positions at the Internal Revenue Service. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.

Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.

*Please beware of copycat tax and law firms misleading the public about their credentials and experience.

Less than 1% of Tax Attorneys Nationwide Are Certified Specialists

Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.

Recent Golding & Golding Case Highlights

  • We represented a client in an 8-figure disclosure that spanned 7 countries.
  • We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
  • We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
  • We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
  • We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.

How to Hire Experienced Offshore Counsel?

Generally, experienced attorneys in this field will have the following credentials/experience:

  • Board Certified Tax Law Specialist credential
  • Master’s of Tax Law (LL.M.)
  • 20-years experience as a practicing attorney
  • Extensive litigation, high-stakes audit and trial experience
  • Dually Licensed as an EA (Enrolled Agent) or CPA

Interested in Learning More about Golding & Golding?

No matter where in the world you reside, our international tax team can get you IRS offshore compliant. 

Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.

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