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Certification of Non-Willfulness | Offshore Voluntary Disclosure Tax Lawyer & Attorney

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Hello, and welcome to Sherayzen Law Office video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

We are continuing our series of vlogs from Beverly Hills, California and today, I’d like to talk to you about probably the most critical document that you need to submit as part of your Streamlined Domestic Offshore Procedures. Actually, as a matter of fact, it is also the most critical document that you would have to submit as part of your Streamlined Foreign Offshore Procedures.

This document is the Certification of Non-Willfulness. The Certification of Non-Willfulness, Form 14654, in the case of Streamlined Domestic Offshore Procedures or Form 14653, in the case of Streamlined Foreign Offshore Procedures, in of itself is not a complex form. In fact, most of it’s language is already determined by the IRS. All you need to do is input certain numbers/certain amounts; so, that part, while it’s critical to do correctly, is not the most crucial part of your Streamlined Disclosure.
The most crucial part, and something that most people do not realize, is the explanation, the attachment, that has to go with your Form 14654 or Form 14653.

That explanation is a critical part of your Offshore Voluntary Disclosure.

  1. It must state all relevant facts
  2. Describe the circumstances that led to non-compliance
  3. State (and this is the critical part) the legal case that will form the crux of your legal argument for non-willfulness

Proving non-willfulness is critical; if you cannot prove non-willfulness, you cannot do a Streamlined Domestic Offshore Procedures or a Streamlined Foreign Offshore Procedures, for that matter.

If you would like to know more about the SDOP process or the process for establishing non-willfulness as part of the SDOP, please call me at (952) 500-8159 or you can email me at [email protected]

Thank you for watching, until the next time.

Streamlined Domestic Offshore Procedures FBARs | SDOP FBAR Tax Lawyer

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Hello, and welcome to Sherayzen Law Office video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

I’m continuing a series of blogs from Beverly Hills, California. Today, I’d like to discuss the FBARs that must be submitted as part of an SDOP disclosure. Now, this is actually pretty normal because the IRS Statute of Limitations is six years, so it is logical that the IRS would require you to submit correct FBARs for the period that encompasses the entire Statue of Limitations for the FBAR.

What is important to emphasize though, is when FBARs are submitted as part of the Streamlined Domestic Offshore Procedures, they have to expressly state so. In other words, FBARs must state, (there’s a special option ‘other’ which you can chose when you file the FBAR) in that section: “This FBAR is filed pursuant to Streamlined Domestic Offshore Procedures”. Again, to repeat myself, the explanation for each FBAR e-filed as part of the SDOP disclosure, must expressly state: “This FBAR is filed pursuant to Streamlined Domestic Offshore Procedures”.

Additionally, and this is completely voluntary, but I believe is useful, that it is a good idea to state the most important non-willfulness arguments in the same explanation, when you file your FBARs.

If you would like to learn more about the SDOP process, you can call me at (952) 500-8159 or you can email me at [email protected].

Thank you for watching, until the next time.

International Tax Attorney Beverly Hills LA California | SDOP – Amended Tax Returns

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Hello, and welcome to Sherayzen Law Office video Blog. My name is Eugene Sherayzen and I’m an international tax attorney and owner of Sherayzen Law Office, Ltd.

Today, we are continuing our series of blogs from Beverly Hills and I would like to talk about Streamlined Domestic Offshore Procedures, in particular, I’d like to talk about the Amended Tax Returns that have to be filed as part of the SDOP process.

You may know as part of the SDOP, that you have to submit amended tax returns for the past three years. The question is: why do you have to amend them? It may seem like an obvious question; but unfortunately, too often, people make mistakes.

Let’s list the three most important things that amended tax returns have to disclose. First of all, they have to disclose correctly, unreported foreign income. Second, they have to disclose unreported foreign assets, on the information returns obviously, such as form 8938, form 8621 and so on and so forth. Finally, the third thing, and a bit of a surprise for many people, the amended tax returns have to disclose US-source income; meaning, that they have to correct the original mistakes that were made by the accountants, tax software or by the taxpayers themselves, on the amended tax returns, as part the SDOP submission.

This is where a lot of people make mistakes, even accountants. Not only is it foreign income tax compliance that has to be reflected, but US tax compliance has to be reflected on the amended tax returns.

If you would like to know more about the Streamlined Domestic Offshore Procedures, you can call me at (952) 500-8159 or you can email me at [email protected].

Thank you for watching, until the next time.

International Tax Attorney Beverly Hills LA California | Introduction

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Hello, and welcome to Sherayzen Law Office video blog. My name is Eugene Sherayzen and I’m an international Tax Attorney and owner of Sherayzen Law Office, Ltd.

Today, I am actually in Beverly Hills, LA and one of the reasons I came here is that I wanted to do a blog about why LA is such a good source of clients for my business.

As paradoxical as that sounds, if you think about it, LA in general, and Beverly Hills, in particular, has a lot of people who come from all over the world. People who are Spaniards, Russians, Chinese, Americans from other states, Indians – all kinds of people who come to LA.

A lot of them, when they come to the United States, to LA in particular, have assets. Now, LA is an expensive city and Beverly Hills is especially expensive. So, that means that the people who come here with assets (these are not small assets) unfortunately, may not know that they have to disclose them and because they don’t know that they have to disclose them, the end result of this is that they never disclose them until something happens, by accident or intention, they find out that they have not been in compliance with US Tax Reporting requirements for a long while, and then they have to do some type of voluntary disclosure and they come to me to do so. This is why LA is such a good source of clients for my business.

In the next videos, I will talk more about the offshore voluntary disclosures. Thank you for watching, until the next time.

International Tax Lawyers Dallas | Difference between US Domestic and US International Tax Law

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Let me give you one example which illustrates very well the difference between US Domestic Tax Law and US International Tax Law.

This comes actually, from sort of a combination of two cases in which I was involved. You have a situation where two clients come to a Business Lawyer and they say, “We want to start a company. We want to start a joint venture; we already have the Capital. We are working on our marketing plan; everything’s fine; we’re ready to start doing this.”

Let me actually draw this. This is a Domestic situation; you have a US Corp which has cash, just cash nothing else. This is year one. Let’s say this company was created in November. Year two, the company continues to have more than 50% of it’s assets as cash.

In this example, nothing happens; for US Tax Purposes, nothing really happens. It’s a Domestic Corp owned by two US Persons… let’s make it interesting; let’s make it 50/50. Fifty percent Foreign and fifty percent US. There’s a (Form) 5472 requirement, most likely if there are reportable transactions. Nothing really happens to the Entity itself.

Now we have a situation where it’s a Foreign Corporation; Fifty percent owned US and fifty percent Foreign Person. Same situation: first year, the company was founded in November, 100% cash; then we go into the second year, same situation, still more than 50% cash.

Here, (first year) nothing happens; here in the year two, this company becomes a PFIC (Passive Foreign Investment Company). What this means, unless an election is being made, (and there are various elections and we’re not going to get into detail) but let’s just discuss the Default method of PFIC calculations.

In this situation, there is a Dividend in year three; it will be subject to a long-term Capital Gains rate, 15 – 20 percent depending on the income level of your Client and possibly an ObamaCare Net Investment Tax of 3.8% on top of that.

Here, it’s going to be a completely different treatment; if there is a Distribution in year three, most likely, I would estimate about 40% will be treated as ordinary income and about 60% will be subject to a 39.6% tax.

This is US Domestic; this is US International. Just because it’s an International, all-of-a-sudden we raised our tax liability by about 20%. A Business Lawyer who thinks that this is the same… you can see what will happen once the Client files his tax returns.

It’s definitely something to be aware of. In these situations I was involved in, the Business Lawyer failed to advise about the difference. Unfortunately, once the PFIC stigma is attached; you cannot get rid of it. Once a PFIC, always a PFIC. You can get rid of it (not to get into too much detail) but it will require Redistribution of the Shares in essence.

That’s a very important illustration of how US International Tax Law may be different from US Domestic Law.