Choosing Your Offshore Voluntary Disclosure Lawyer

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Choosing the right Offshore Voluntary Disclosure Lawyer is a very important decision that may determine the fate of your entire offshore voluntary disclosure case. While making this choice, I recommend that you consider the following five main factors while choosing your Offshore Voluntary Disclosure Lawyer.

1. Areas of Practice of Your Offshore Voluntary Disclosure Lawyer

The first factor is to determine whether your Offshore Voluntary Disclosure lawyer really practices in this area of law. There are attorneys (especially in large and general practice law firms) out there who like to “dabble” in various areas of law but who really do not know international tax law in depth. You are well advised to stay away from such firms.

You should be looking for an attorney who has devoted the great majority of his practice to international tax law, particularly Offshore Voluntary Disclosure. Remember, Offshore Voluntary Disclosure involves not only the sophisticated analysis of the voluntary disclosure options of the foreign bank and financial accounts (i.e. issues associated with the Report of Foreign Bank and Financial Accounts – “FBAR”), but also the complex interaction of various other parts of international tax compliance requirements (such as PFICs, ownership of foreign business entities, ownership of Foreign trusts and so on).

Sherayzen Law Office is a law firm that specializes in international tax law and specifically in Offshore Voluntary Disclosures. Virtually our entire practice is devoted to helping clients throughout the world to comply with the complex requirements of U.S. international tax law, particularly voluntary disclosure of foreign income, offshore bank and financial accounts, foreign gifts and inheritance, and ownership of foreign business entities and trusts.

2. Experience of Your Offshore Voluntary Disclosure Lawyer

After making sure that he really practices in the area of Offshore Voluntary Disclosure, you should find out about the experience of your Offshore Voluntary Disclosure lawyer. What you should be looking for is the concentration of the experience as well as number of years that the attorney practices law (at least five years).

Do not be fooled by someone who says that he has thirty years of Offshore Voluntary Disclosure experience – this is a relatively new and quickly developing area of practice. the IRS implemented its first voluntary disclosure program (which was quite unknown at that time) in 2003. The first voluntary disclosure program of real importance was the 2009 OVDP and it served as a prototype for the highly successful 2011 OVDI and the later 2012 OVDP and 2014 OVDP (which closed in 2018).

Since 2005, Sherayzen Law Office has developed a unique expertise in the area of Offshore Voluntary Disclosure helping clients throughout the world, and it has practiced international tax law with the emphasis on offshore voluntary disclosures during the existence of all major IRS Voluntary Disclosure Programs.

3. Personal Attention of Your Offshore Voluntary Disclosure Lawyer to Your Voluntary Disclosure Case

The key point here is that, since offshore voluntary disclosures are highly fact-dependent, it is very important the experienced offshore voluntary disclosure lawyer that you wish to retain for your case is the one who will actually handle the entire case, not just the voluntary disclosure. Similarly, you want to make sure that your offshore voluntary disclosure lawyer is able to communicate with you personally with respect to the case.

Unfortunately, it is common practice for large law firms to divide up the work between the partner and the associates to the extent that the partner (usually an experienced attorney) contributes very little beyond getting you to sign the retainer agreement while less-experienced and even complete inexperienced associates do most of the work, potentially jeopardizing your entire voluntary disclosure.

Eugene Sherayzen, the founder and owner of Sherayzen Law Office, will personally handle your initial consultation and your entire case. Of course, parts of the case will be given to associates, accountants and staff members; however, Mr. Sherayzen invests a substantial amount of his time in training and supervision of all members of Sherayzen Law Office, making sure that the high quality of our firm’s work is maintained while certain cost benefits are passed through to the client. Moreover, Mr. Sherayzen is personally available for personal communication throughout the progress of your case.

4. Ethical Creativity of Your Offshore Voluntary Disclosure Lawyer

Offshore voluntary disclosures require consideration of interaction of various strategies and possibilities before the your disclosure options are finalized. This requires a healthy degree of ethical creativity that must be displayed by your offshore voluntary disclosure lawyer as early as the initial consultation.

If the offshore voluntary disclosure lawyer only proposes one option without considering any facts or without at least mentioning the other options and why they are rejected, then you may wish to get a second opinion. Similarly, if the attorney only concentrates on the OVDP penalty (program now closed) without discussion of the FBAR penalty structure, something may not be right.

Also, stay away from attorneys (and accountants) who propose unethical solutions which involve concealment of truth from the IRS or who propose easy solutions. Your voluntary disclosure is required to be truthful and complete; anything short of this standard may get you in deep troubles with the IRS and result in high civil and even criminal penalties.

Sherayzen Law Office follows a very high standard for ethical creativity, making sure that the required disclosures are honestly made the IRS while implementing ethical creative solutions based on legitimate interpretations of the Internal Revenue Code and Treasury regulations. In the end, we strive to achieve the combination of the required transparency with the tax and penalty reductions permitted by the Code.

5. Trust in Your Offshore Voluntary Disclosure Lawyer

This fifth factor of “trust” is highly important. If, after your initial consultation, you have a feeling of distrust and suspicion of the voluntary disclosure lawyer or his tactics, my suggestion is to try another attorney.

The stakes in the offshore voluntary disclosure can be very high and the information involved can be very sensitive. In such situations, at least some feeling of trust in the abilities and honesty of your Offshore Voluntary Disclosure Lawyer is crucial to the success of your case.

Contact Sherayzen Law Office to Retain The Right Offshore Voluntary Disclosure Lawyer for Your Case

If you are thinking about doing an Offshore Voluntary Disclosure with respect to your foreign assets and foreign income, contact Sherayzen Law Office for experienced professional help.

Over the years, Mr. Eugene Sherayzen, an experienced Offshore Voluntary Disclosure Lawyer has developed a unique expertise in the Offshore Voluntary Disclosure which allows Sherayzen Law Office to successfully help clients throughout the United States and the world. We offer a comprehensive approach which produces realistic voluntary disclosure options assessment on which you can rely. Then, once the voluntary disclosure option is chosen, we will implement the necessary ethical strategies (including drafting of legal documents and completing the necessary tax forms) and rigorously defend your position against the IRS.

Contact Us to schedule a Confidential Consultation now.

Lebanon FATCA Note: Is the “Switzerland of Middle East” in the Crosshair of FATCA?

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This Lebanon FATCA update is intended to provide a broad analysis of the impact of the U.S. Foreign Account Tax Compliance Act (“FATCA”) on the numerous U.S. accountholders in Lebanon.

Lebanon FATCA: Background Information

The Lebanese banking secrecy rules, commonly known as the “1956 Law”, have earned the country the unofficial title of the “Switzerland of the Middle East”. It is estimated that as many as 100,000 U.S. taxpayers took advantage of the 1956 law and opened foreign bank and financial accounts in Lebanon.

Lebanon FATCA: Foreign Account Tax Compliance Act Threatens the 1956 Law

The UBS case in 2008 became a crucial turning point in global tax compliance, because, for the first time, the US was able to leverage its economic might to break through the wall of bank secrecy in the country which, until recently, was synonymous with bank secrecy.

Encouraged by the crucial success over UBS in 2008, the IRS and U.S. Congress took an unprecedented step in international tax compliance with the passage of FATCA in 2010. FATCA is not just another law, but a new global standard for the international tax transparency which endangered all U.S. taxpayers with undisclosed foreign accounts.

One of the unique aspects of FATCA is that it requires foreign financial institutions (“FFIs”) to report directly or indirectly to the IRS all bank and financial accounts held by their U.S. customers. In essence, it turned foreign banks into the agents of the IRS compliance effort.

While FATCA requires legislative adjustments in many countries, in Lebanon, FATCA ran counter to the spirit and letter of the 1956 Law.

Lebanon FATCA: Initial and Subsequent Reaction in Lebanon

At first, the reaction of the Lebanese banks was very negative with even talk of accepting the 30% tax withholding requirement imposed by FATCA. As late as the first quarter of 2012, Lebanon was considered as one of the potentially most vexatious non-compliant countries.

By April of 2012, however, the attitude of the Lebanese banks and Lebanese financial authorities began to change rapidly. In February of 2013, the head of Lebanon’s banking association stated that the Lebanese banks will cooperate with FATCA.

At the present time, all major Lebanese Banks (such as Bank Audi, Blom Bank, Bank of Beirut and so on) are in the process of implementing FATCA regulations. Given the another unprecedented step by the U.S. government – voluntary disclosure program for banks in Switzerland – it is expected that the Lebanese Banks (as the example of Bank of Beirut demonstrated) will strive to implement FATCA as fast as possible.

Lebanon FATCA: What Does FATCA Compliance Mean for U.S. Taxpayers with Undisclosed Accounts in Lebanon

The move of the Lebanese banks toward FATCA compliance has profound consequences for all U.S. taxpayers with undisclosed bank and financial accounts in Lebanon even though the exact impact is not likely to be felt in the same way by all U.S. accountholders (due to the individual circumstances of each U.S. taxpayer).

At this point, these U.S. taxpayers with Lebanese accounts should understand that their account information is likely to be reported by the Lebanese banks to the IRS within a fairly short time (it is hard to state it exactly and some of the account information may have already been disclosed, but I would expect the Lebanon FATCA compliance to be firmly implemented by the end of 2014 or early 2015). This development is likely to have two major effects on U.S. taxpayers. First, the U.S. accountholders whose information will be disclosed to the IRS are not going to be able to enter the OVDP (unless there is a specific exception or a chance in the OVDP rules – program is now closed), which is the official IRS voluntary disclosure program for offshore accounts.

Second, once the IRS follows up on the information that it receives from the Lebanese banks (i.e. opens up an investigation), these taxpayers are likely to suffer from the imposition of the draconian FBAR willful penalties. Criminal penalties, including jail time, are also possible. See this article for a more detailed explanation of the FBAR penalties.

Thus, the implementation of FATCA in Lebanon means the end of 1956 Law and Lebanese Bank Secrecy for U.S. taxpayers. It also means that the U.S. taxpayers with undisclosed Lebanese accounts are currently in a very dangerous position and may face heavy penalties.

Lebanon FATCA: U.S. Taxpayers with Undisclosed Accounts in Lebanon Should Explore their Voluntary Disclosure Options As Soon As Possible

With the implementation of FATCA in Lebanon, U.S. taxpayers have to act fast if they want to reduce or avoid IRS penalties. This is why they should consult an experienced international tax attorney who specializes in offshore voluntary disclosures as soon as possible.

Contact Sherayzen Law Office for Professional Legal and Tax Help With the Voluntary Disclosure of Lebanese Bank and Financial Accounts

If you have undisclosed bank or financial accounts in Lebanon, contact the offshore voluntary disclosure experts of Sherayzen Law Office now. Our experienced international tax law firm will thoroughly analyze your case, advise on the available voluntary disclosure options, prepare all necessary tax forms and legal documents, and professionally represent your interests through the IRS voluntary disclosure process.

Letters from Swiss Banks: What Should You Do?

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Since the last quarter of 2013, an increasing number of U.S. taxpayers with accounts in Swiss banks have received letters from Swiss Banks regarding participation in the U.S. Department of Justice (“DOJ”) The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”). It is very important to react to these letters in a thoughtful yet rapid manner.

Letters from Swiss Banks: What They Usually Say

In these letters from Swiss Banks, the taxpayers are typically advised (sometimes with the somewhat offensive phrase “as you almost certainly know”) of the fact that their Bank will participate in the Program and disclose the taxpayer’s accounts in Switzerland. Then, the letters typically discuss three issues (note: different banks would follow different format, but the essence is the same).

First, the letters from Swiss Banks ask the taxpayer to confirm whether he has already properly disclosed their Swiss bank accounts to the IRS. Some banks, like Banque Cantonale Vaudoise (“BCV”) even go as far as asking the taxpayers to confirm that other international tax compliance forms, such as Forms 5471, 3520 and, surprisingly, PFIC Form 8621, have also been filed with the IRS. Other banks just ask for some sort of documentation that everything has been properly declared to the IRS.

Then, the letters from Swiss Banks ask the taxpayers are asked to verify if his Swiss bank accounts were disclosed as part of the official IRS Offshore Voluntary Disclosure Program (“OVDP”) now closed.

Finally, the letters from Swiss Banks inform the taxpayers with undisclosed Swiss Bank accounts about the existence of the OVDP and propose such actions for the readers as considering to enter into the OVDP, obtaining more information about the OVDP from the Bank, and, finally, offering to provide the necessary bank statements for the taxpayer to enter the OVDP. Some banks (for example, Nue Privat Bank) will even later offer to supply the tax information (though, these reports should be approached with a great deal of skepticism because these statements could contain a number of mistakes, such as failure to recognize the application of PFIC rules). Most letters from Swiss Banks also provide space for the taxpayers to express their consent to the disclosure of their undisclosed Swiss bank and financial accounts to the IRS.

Consequences for U.S. Taxpayers Who Received Letters from Swiss Banks

It is difficult to overstate the great impact that these letters from Swiss Banks may have on the taxpayer’s position. I want to concentrate on two most important effects of the letters from Swiss Banks. First and foremost, they provide notice to the taxpayer about the requirement to disclose their Swiss bank and financial accounts (and, in case of BCV and some other banks, other foreign assets such as business ownership) to the United States. Even if a taxpayer simply did not know about the FBAR requirement in the past, his behavior as a result of receiving these letters from Swiss Banks will now be subject to scrutiny – failure to act on these letters for a long time and willful disregard of them may change the taxpayer’s position from non-willful to willful, subjecting him to draconian FBAR willful penalties, including opening the possibility of criminal penalties to be applied.

Second, upon fulfilling the Notice requirement with these letters, the Swiss banks are free to disclose certain information to the IRS under the US-Swiss FATCA treaty. Once the IRS receives such information from the Swiss Banks, the exposed U.S. taxpayers most likely will not be able to participate in the OVDP.

Hence, once the taxpayers receive these letters, time becomes a crucial factor, because, if the decision to enter the OVDP is made by these taxpayers, it should be implemented as soon as possible.

What Should You Do Upon Receipt of Letters from Swiss Banks?

Your initial response to the letters from Swiss Banks may determine the entire course of your case.

1. Consult an International Tax Attorney

The first and most crucial step is not to panic and contact an international tax attorney who specializes in the voluntary disclosure of the foreign bank and financial accounts as well as other assets.

I want to emphasize that you need to contact an experienced international tax attorney, not an accountant. Offshore voluntary disclosure is a legal issue and its venue should be determined by an attorney, not an accountant. I have seen too many cases where accountants horribly mishandled their clients’ cases (on both strategic and tactical issues) because the accountants overstep the limitations of their profession and enter the world of legal advice.

The geographic location of your international tax attorney should not matter; a much more important factor should be the attorney’s experience in the case and you personal feeling of trust. If the attorney immediately advises you to enter the OVDP program without even considering the facts of your case, consider it a red flag and seek second opinion.

2. Try to Obtain As Much Information As Possible While Preparing for the Initial Consultation

During the initial consultation, the attorney will have no choice but to rely on you for the initial information required to assess the state of your case. So, try to get as much information as possible regarding your foreign bank accounts while preparing for the initial consultation.

3. Retain an International Tax Attorney to Handle Your Case According to the Proposed Strategy

After the initial consultation, you should have a pretty good idea of what your options are. Think about these options and the attorney’s recommendations, but not take too much time to do so (remember, time is of the essence in these cases). Make your decision and retain an international tax attorney that you like for your case.

Contact Sherayzen Law Office for Professional and Experienced Legal Help With the Voluntary Disclosure of Your Swiss Bank Accounts

As soon as you receive your letters from Swiss Banks, contact Sherayzen Law Office for professional legal and tax help with your voluntary disclosure. Our experienced international tax law firm has helped numerous U.S. taxpayers with the voluntary disclosure of their Swiss bank and financial accounts as well as other foreign assets.

We can help you! Contact Us to Schedule a Confidential Consultation Now.

Second Quarter of 2014 IRS Underpayment and Overpayment Interest Rates

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On March 14, 2014, the IRS announced that the underpayment and overpayment interest rates will remain the same for the calendar quarter beginning April 1, 2014. The rates will be:

three (3) percent for overpayments [two (2) percent in the case of a corporation];
three (3) percent for underpayments;
five (5) percent for large corporate underpayments; and
one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

Interest factors for daily compound interest for annual rates of 0.5 percent are published in Appendix A of Revenue Ruling 2011-32. Interest factors for daily compound interest for annual rates of 2 percent, 3 percent and 5 percent are published in Tables 7, 9, 11, and 15 of Rev. Proc. 95-17, 1995-1 C.B. 561, 563, 565, and 569.

OVDP International Tax Attorney: Letters from Swiss Banks & OVDP

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This is a natural question for an OVDP International Tax Attorney: in light of the ongoing U.S. Department of Justice (“DOJ”) The Program for Non-Prosecution Agreements or Non-Target Letters for Swiss Banks (the “Program”), should every U.S. taxpayer with undisclosed Swiss accounts enter the Program?

As everything in international tax law, the answer of whether you should enter the OVDP program (now closed) after receiving a letter from the Swiss Bank is not that simple and depends (as any good OVDP International Tax Attorney will tell you) on the particular circumstances of your case. The article below is not intended to give legal advice, but it is merely a discussion of various possibilities – please contact Mr. Eugene Sherayzen, an experienced international tax attorney of Sherayzen Law Office for professional advice with respect to your undisclosed foreign accounts.

OVDP International Tax Attorney: Letters from Swiss Banks

Ever since more than a hundred banks officially announced (and a lot of private banks did so unofficially) that they will enter the Program, U.S. taxpayers with undisclosed Swiss bank accounts have received letters from their Swiss banks asking the taxpayers whether they are in compliance with U.S. tax laws, whether they have filed their FBARs (Report of Foreign Bank and Financial Accounts, currently Form FinCen 114 (formely TD F 90-22.1))and, if not, whether they entered the IRS Offshore Voluntary Disclosure Program (OVDP).

Indeed the emphasis in all of the letters has been on the OVDP without any regard to the individual circumstances of the taxpayers and despite the fact that many of these taxpayers learned about the existence of the FBARs from the very letters from their Swiss banks.

OVDP International Tax Attorney: Common Chorus to Join OVDP

It is not only the Swiss banks that are urging these taxpayers to enter the OVDP. The IRS is also very eager to see as many people enter the OVDP as possible. Shockingly, the great majority of accountants readily take on the legal (not accounting) issue of whether a client should enter the OVDP. The accountants herd their clients into the OVDP without ever discussing the consequences of doing so or any other legal alternatives.

The end result of this common stance has been to convince the terrified taxpayers that OVDP is the only route available to them irrespective of their circumstances, whether the FBAR non-compliance was willful or non-willful, whether they have reasonable cause for the delayed filing of their FBARs or not, whether they owe any taxes or not, and so on.

OVDP International Tax Attorney: OVDP is Option #1

Of course, as an OVDP International Tax Attorney, I agree that there is no doubt that OVDP is Option #1 that must be considered by U.S. taxpayers who received a letter from their Swiss banks However, being Option #1 does not mean the only option and does not mean that it should be automatically followed.

Moreover, even under the OVDP, there are many issues, strategies and possibilities that must be explored by your OVDP International Tax Attorney.

Undoubtedly, OVDP has tremendous benefits to offer to U.S. taxpayers with willful non-compliance and who may be facing realistic criminal penalties. On the other hand, the calculation becomes much more complicated when your client simply did not know about the FBARs and the IRS is not likely to be able to sustain its burden of proof on the willfulness issue.

Comprehensive Legal Analysis of the Voluntary Disclosure Alternatives Must Be Considered

In all cases, but even more so in the non-willful cases, a very complex calculation and cost-benefit analysis must be conducted by your OVDP International Tax Attorney, comparing traditional FBAR penalty structure with the OVDP penalty structure. Outside factors, such as time, legal fees, complexity of the issues, impact on tax returns, appeal possibilities, and many others, should be considered your OVDP International Tax Attorney. Once all factors are considered, the Attorney should advise you on the available Voluntary Disclosure alternatives and the probability of success.

Only then, armed with this knowledge and based on the analysis of a good OVDP International Tax Attorney, should a U.S. taxpayer with undisclosed Swiss accounts make his decision.

Contact Sherayzen Law Office for Professional Legal and Tax Help With the Voluntary Disclosure of Your Foreign Accounts

The point of this article is not to diminish the value of the OVDP, but to argue that all U.S. taxpayers with undisclosed foreign accounts should be given a chance to consider all of their voluntary disclosure options based on the comprehensive analysis of their particular circumstances.

This is precisely what Sherayzen Law Office experienced international tax firm can do for you. We will thoroughly analyze the facts of your case, assess the potential FBAR and OVDP penalties and tax liabilities, analyze the voluntary disclosure alternatives, create a comprehensive voluntary disclosure plan for you, and implement this plan (including the preparation of all legal documents and tax forms).

Contact Us to schedule a Confidential Consultation with an experienced International Tax Attorney.