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2022 Streamlined Domestic Offshore Procedures: Pros and Cons

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As the year 2021 winds down, US taxpayers with undisclosed foreign assets and foreign income need to consider their 2022 offshore voluntary disclosure options. As it has been the case since the second half of 2014 (really the year 2018 when the 2014 OVDP was closed), I expect that Streamlined Domestic Offshore Procedures will continue to be the flagship voluntary disclosure option in 2022 for US taxpayers who reside in the United States. This is why noncompliant US taxpayers should understand well the main advantages and disadvantages of participating in the 2022 Streamlined Domestic Offshore Procedures.

2022 Streamlined Domestic Offshore Procedures: Background Information and Purpose

The IRS created the Streamlined Domestic Offshore Procedures (usually abbreviated as “SDOP”) on June 18, 2014, though the Certification forms became available only a few months later. Since its introduction, Streamlined Domestic Offshore Procedures quickly eclipsed the then-existing IRS Offshore Voluntary Disclosure Program (“OVDP”) and became the most popular offshore voluntary disclosure option for US taxpayers who reside in the United States. As we discuss the advantages of the 2022 SDOP, you will quickly understand the reason for this meteoric rise in popularity of the SDOP.

The main purpose of the Streamlined Domestic Offshore Procedures is to encourage non-willful US taxpayers to voluntarily resolve their prior noncompliance with US international tax reporting requirements in exchange for a reduced penalty, simplified disclosure procedure and a shorter disclosure period. Pretty much any non-willful US international tax noncompliance can be resolved through SDOP: foreign income, FBAR, Form 8938, Form 5471, Form 8621, Form 926, et cetera.

2022 Streamlined Domestic Offshore Procedures: Main Advantages

In exchange for a voluntary disclosure of their prior tax noncompliance through SDOP, US taxpayers escape income tax penalties and pay only a one-time Miscellaneous Offshore Penalty with respect to their prior failures to file the required US international information returns. It is important to emphasize that the Miscellaneous Offshore Penalty replaces not only FBAR penalties, but also penalties for noncompliance with respect to other US international information returns, such as Forms 5471, 8865, 926, et cetera. Depending on the specific circumstances of a case, the Miscellaneous Offshore Penalty is usually below the combined potential penalties normally associated with failure to file these forms. In other words, noncompliant taxpayers can greatly reduce their IRS noncompliance penalties through their participation in the Streamlined Domestic Offshore Procedures. This is one of the most important SDOP benefits.

Another advantage of the Streamlined Domestic Offshore Procedures is the limited procedural scope of this voluntary disclosure option. What I mean by this is that the taxpayers should only submit the forms covered by the general statute of limitations unless they choose (i.e. not required, actually choose to do so) to do otherwise. The taxpayers only need to file three (sometime even less) amended US tax returns and six FBARs (sometimes seven and sometimes less than six). This limited disclosure stands in stark contrast with other major voluntary disclosure initiatives, such as 2014 OVDP (which required filings for the past eight years).

Moreover, despite the limited scope of the SDOP filings, taxpayers who utilize the Streamlined Domestic Offshore Procedures are usually able to fully resolve their prior US international tax noncompliance issues even if these years are not included in the actual SDOP filings. This means that the participating taxpayers are able “wipe the slate clean” – i.e. to erase their prior US international tax noncompliance from the time when it began. I should warn, however, that this is not necessarily always the case; I have already encountered efforts from the IRS to open years for which amended tax returns were not submitted (there were specific circumstances, however, in all of these cases that resulted in this increased IRS interference).

The last major advantage of the Streamlined Domestic Offshore Procedures is that this option only requires to establish non-willfulness rather than reasonable cause. Non-willfulness is a much easier legal standard to satisfy (be careful, this is NOT an “easy standard”, just an easier one) than reasonable cause.

2022 Streamlined Domestic Offshore Procedures: Main Disadvantages

Usually, participation in the Streamlined Domestic Offshore Procedures is highly advantageous to noncompliance taxpayers. However, there are some disadvantages and shortcomings in this program. In this article, I will concentrate only on the three most important of them.

First, this voluntary disclosure option is open only to taxpayers who filed their US tax returns for prior years. This requirement is the exact opposite of the Streamlined Foreign Offshore Procedures (“SFOP”) which allows for the late filing of original returns.

The problem is that there is a large segment of taxpayers who were perfectly non-willful in their prior US international tax noncompliance, but they never filed their US tax returns either due to special life circumstances (such as death in the family, illness, unemployment, et cetera), they were negligent or they believed that they were not required to file them (especially in situations where all of their income comes from foreign sources). These taxpayers would be barred from participating in the SDOP.

Second, when they participate in the Streamlined Domestic Offshore Procedures, the taxpayers have the burden of proof to establish their non-willfulness with respect to their inability to timely report their foreign income as well as file FBARs and other US international information returns. Outside of the SDOP, the IRS has the burden of proof to establish willfulness; if it cannot carry this burden, then the taxpayer is automatically considered non-willful.

The problem is that most cases have positive and negative facts at the same time. This means that a lot of taxpayers are actually in the “gray” area between willfulness and non-willfulness. In many of these cases, the burden of proof may play a critical role in determining whether a taxpayer is eligible to participate in the Streamlined Domestic Offshore Procedures. By the way, this decision should be made only by an experienced international tax attorney who specializes in this area of law, such as Mr. Eugene Sherayzen of Sherayzen Law Office.

Finally, participation in the Streamlined Domestic Offshore Procedures does not provide a definitive closure to its participants. Unlike OVDP, SDOP does not offer a Closing Agreement without an audit; there may be a follow-up audit after the IRS processes your voluntary disclosure package This means that going through Streamlined Domestic Offshore Procedures may not be the end of your case; the IRS can actually audit you over the next three years. If this happens, the audit of your voluntary disclosure will focus not only on the correctness of your disclosure, but also on the truthfulness and correctness of your non-willfulness certification.

Contact Sherayzen Law Office for Professional Help With 2022 Streamlined Domestic Offshore Procedures

If you have undisclosed foreign accounts or any other foreign assets, contact Sherayzen Law Office for professional help with your offshore voluntary disclosure. We have successfully helped hundreds of US taxpayers around the world with their offshore voluntary disclosures, including Streamlined Domestic Offshore Procedures. We can also help you!

Contact Us Today to Schedule Your Confidential Consultation!

Pakistani Bank Accounts FBAR & FATCA Compliance | International Tax Lawyer

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Over the past couple of years, I have seen a rise in the number of clients with Pakistani bank accounts. This increase is undoubtedly tied to the last year’s changes to Pakistani tax laws, which now require a disclosure of certain foreign assets for certain Pakistani tax residents. These new laws created for the very first time awareness among Pakistani taxpayers that foreign assets may be subject to a separate disclosure. For Pakistanis who are also US Persons, this awareness created further inquiries into their US tax reporting of their Pakistani bank accounts. In this article, I will discuss the two most important US tax reporting requirements that may be applicable to US taxpayers with Pakistani bank accounts – FBAR and FATCA Form 8938.

Pakistani Bank Accounts: Income-Reporting Requirements

Before we delve into our discussion of FBAR and FATCA, it is important to address the income tax reporting requirements concerning foreign accounts in general as well as Pakistani accounts in particular. If you are a tax resident of the United States, you are subject to the worldwide income reporting requirement and you must disclose all income generated by your Pakistani bank accounts on your personal US tax return.

This is an absolute rule with almost no exceptions. It does not matter whether you live outside of the United States or reside in the United States, whether this income is brought to the United States or if it continues to accumulate in your foreign bank accounts, or whether you already paid Pakistani taxes on this income or not. As long as you are a tax resident of the United States, you must comply with the worldwide income reporting requirement.

This requirement applies to all reportable income as determined by US tax rules. I want to emphasize this point: the worldwide income reporting rule requires US tax residents to disclose all of their foreign income deemed reportable under the US tax rules, not the Pakistani rules. Since there are huge differences between the Pakistani tax code and the US Internal Revenue Code, this is a potential tax trap for US taxpayers with Pakistani bank accounts.

Pakistani Bank Accounts: Asset Disclosure In General

As I mentioned above, under FATCA (Foreign Account Tax Compliance Act) as well as the BSA (Bank Secrecy Act of 1970), Pakistani bank accounts may be subject to multiple asset disclosure requirements. FinCEN Form 114 (FBAR) and FATCA Form 8938 are undoubtedly the most important among these requirements.

Pakistani Bank Accounts: FBAR

The most important requirement that applies to US taxpayers with Pakistani bank accounts is FinCEN Form 114, the Report of Foreign Bank and Financial Accounts, commonly known as “FBAR”. As long they meet the filing threshold (see below), US taxpayers are required to disclose all of their Pakistani bank accounts over which they have signatory authority or in which they have a financial interest (i.e. they own an account directly or indirectly, either individually or jointly).

FBAR is a unique information return. The anomaly begins with the fact that FBAR is not technically a tax form, but a BSA form which has been administered by the IRS since the year 2001. This is why FBAR is not filed together with the tax return, but has to be e-filed separately through BSA website.

Second, FBAR also has a very low filing threshold – just $10,000. Moreover, this threshold is determined by taking the highest balances during a calendar year of all of the taxpayer’s foreign accounts (even if these accounts are located in another country in addition to Pakistan) and adding them all up. Sometimes, this results in significant over-reporting of a person’s actual balances, which easily satisfies the reporting threshold.

Finally, FBAR has the most severe noncompliance penalties among all information returns concerning foreign asset disclosure. Its penalties range from non-willful penalties (i.e. potentially a situation where a person simply did not know about FBAR’s existence) to extremely high civil willful penalties and even criminal penalties. In other words, in certain circumstances, FBAR noncompliance may result in actual jail time.

Pakistani Bank Accounts: FATCA Form 8938

While a relative newcomer, FATCA Form 8938 quickly occupied a special place in US international tax compliance. It may appear that Form 8938 duplicates FBAR with respect to foreign bank account reporting, but there are very important differences between these forms. Let’s focus on the top five differences.

First of all, unlike FBAR, it is filed with a US tax return and forms part of the return. This means that the Form 8938 noncompliance may keep the statute of limitations open on the entire tax return indefinitely, potentially subjecting it to an IRS audit indefinitely.

Second, there are differences in how information concerning foreign accounts is being disclosed on FBAR and Form 8938. Form 8938 forces US taxpayers to disclose not only most of the information that is required to be reported on FBAR, but also such details as whether an account was opened or closed in the reporting year, whether it produced any income, how much income was produced, et cetera. This may give the IRS additional information necessary to determine if there was prior tax noncompliance with respect to these accounts.

Third, there are important substantive differences between these two forms with respect to what accounts have to be disclosed. For example, signatory authority accounts must be disclosed on FBAR, but Form 8938 has no such requirement. On the other hand, a bond certificate may not need to be reported on FBAR, but it must be disclosed on Form 8938. In general, Form 8938 is likely to apply to a wider range of Pakistani assets than FBAR; this is why it is often called the “catch-all” form.

Fourth, while FBAR penalties are extremely severe, Form 8938 sports its own arsenal of noncompliance penalties. While they are theoretically lower than FBAR penalties, the Form 8938 penalties may have an equivalent impact due to the fact that they have a much wider range. For example, Form 8938 noncompliance may lead to higher accuracy-related penalties with respect to income-tax noncompliance. A taxpayer’s ability to utilize foreign tax credit may also be impacted by the Form 8938 penalties.

Finally, unlike FBAR, Form 8938 comes with a third-party FATCA verification mechanism. Under FATCA, the IRS should receive foreign-account information not only from taxpayers who file Forms 8938, but also from their foreign financial institutions. This means that it is much easier for the IRS to identify Form 8938 noncompliance than that of FBAR. It also means that Form 8938 noncompliance may have a higher chance to be investigated and penalized by the IRS.

Contact Sherayzen Law Office for Professional Help With US Tax Reporting of Your Pakistani Bank Accounts

If you are a US Person who has undisclosed Pakistani bank accounts, contact Sherayzen Law Office for professional help as soon as possible. We have helped hundreds of US taxpayers around the globe to resolve their past FBAR and FATCA noncompliance, including with respect to financial accounts in Pakistan We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Beware of Flat-Fee Lawyers Doing Streamlined Domestic Offshore Procedures

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Recently, I received a number of phone calls and emails from people who complained about incorrect filing of their Streamlined Domestic Offshore Procedures (“SDOP”) packages by lawyers who took their cases on a flat-fee basis. In this article, I would like to discuss why a flat fee is generally not well-suited for a proper SDOP preparation and why clients should critically examine all facts and circumstances before retaining flat-fee lawyers.

A small disclosure: the analysis below is my opinion and the result of my prior experience with SDOPs. Moreover, I am only describing general trends and there are certainly exceptions which may be applicable to a specific case. Hence, the readers should consider my conclusions in this article carefully and apply them only after examining all facts and circumstances related to a specific lawyer before making their final decision on whether to retain him.

Flat-Fee Lawyers versus Hourly-Rate Lawyers

The two main business models that exist in the professional tax community in the United States with respect to billing their clients are the hourly-rate model and the flat-fee model. The hourly-rate model means that an attorney’s fees will depend on the amount of time he actually worked on the case. The flat-fee model charges one fee that covers a lawyer’s work irrespective of how much time he actually spends on a case.

Both billing models have their advantages and disadvantages. Generally, the chief advantage of an hourly-rate model is potentially higher quality of work. The hourly-rate model has a built-in incentive for attorneys to do as accurate and detailed work as possible, maximizing the quality of the final work product. An hourly-rate attorney is likely to take more time to explore the documents, uncover hidden problems of the case and properly resolve them.

The disadvantage of an hourly-rate model is that it cannot make an absolutely accurate prediction of what the legal fees will ultimately be. However, this problem is usually mitigated by estimates – as long as he knows all main facts of the case, an experienced attorney can usually predict the range of his legal fees to cover the case. Only a discovery of substantial unexpected issues (that were not discussed or left unresolved during the initial consultation) will substantially alter the estimate, because more time would be needed to resolve these new issues.

The chief advantage of the flat-fee model is the certainty of the legal fee – the client knows exactly how much he will pay. A secondary advantage of this model is the built-in incentive for flat-fee lawyers to complete their cases as fast as possible.

However, this advantage is undermined by several serious disadvantages. First, the flat-fee model provides a powerful incentive for lawyers to spend the least amount of time on a client’s case in order to maximize their profits; in other words, the flat-fee model has a potential for undermining the quality of a lawyer’s work product. Of course, it does not happen in every case, but the potential for such abuse is always present in the flat-fee model.

Second, closely-related to the first problem, the flat-fee model discourages lawyers from engaging in a thorough analysis of their clients’ cases. This may later result in undiscovered issues that may later expose a client to a higher risk of an unfavorable outcome of the case. Again this does not happen in every case, but I have repeatedly seen this problem occur in voluntary disclosures handled by flat-fee lawyers and CPAs.

Finally, a client may actually over-pay for a flat-fee lawyer’s services compared to an hourly-rate attorney, because a flat-fee lawyer is likely to set his fees at a high level to make sure that he remains profitable irrespective of potential surprises contained in the case. Of course, there is a risk for flat-fee lawyers that the reverse may occur – i.e. despite being set to a high level, the fee is still too small compared to issues involved in a case.

The effective usage of either one of these billing models differs depending on where they are applied. In situations where the facts are simple and legal issues are clear, a flat-fee model may be preferable. However, where one deals with a complex legal situation and the facts cannot all be easily established during an initial consultation, the hourly-rate model with its emphasis on thoroughness and quality of legal work is likely to be the best choice.

Flat-Fee Lawyers Can Be An Inferior Choice for Streamlined Domestic Offshore Procedures

In my opinion and based on the analysis above, in the context of an SDOP voluntary disclosure, a flat-fee engagement is particularly dangerous because of the nature of offshore voluntary disclosure cases.

Voluntary disclosures are likely to deal with complex US international tax compliance issues and unclear factual patterns. It may be difficult to identify all legal issues and all US international tax reporting requirements during an initial consultation. There are too many facts that clients may simply not have at their disposal during an initial consultation. Moreover, additional issues and questions are likely to arise after the documents are processed. I once had a situation where I discovered that a client had an additional foreign corporation with millions of dollars only several months after the initial consultation – the corporation was already closed and the client forgot about it.

For these reasons, SDOP and offshore voluntary disclosures in general require an individualized, detailed and thorough approach as well as a hard-to-determine (during an initial consultation) depth of legal analysis which is generally ill-fit for a flat-fee engagement. A flat-fee lawyer is unlikely to accurately estimate how much time is required to complete a client’s case and, hence, unlikely to accurately set his flat fee for the case.

This can cause a huge conflict of interest as the case progresses. I have seen a number of cases where, in an attempt to remain profitable, flat-fee lawyers did their analysis too fast and failed to properly identify all relevant tax issues; as a result, the voluntary disclosures (including SDOP disclosures) done by them had to amended later by my firm. This caused significant additional financial costs and mental stress to my clients.

In my opinion, this potential conflict of interest makes the flat-fee model unsuitable for the vast majority of the SDOP cases.

Beware of Some Flat-Fee Lawyers Including Unnecessary Services Into the Flat Fee

This applies only to a tiny minority of flat-fee lawyers. I have observed several times where flat-fee lawyers included irrelevant services that the client never used to increase the flat fee for the case (for example, audit fees for years not included in the SDOP). My recommendation is that, if you decide to go with a flat-fee arrangement, you should make sure that it includes only the services that you will likely use.

Contact Sherayzen Law Office for Professional Help With Streamlined Domestic Offshore Procedures

Sherayzen Law Office is a leader in SDOP disclosures. We have helped clients from over 70 countries with their offshore voluntary disclosures, including SDOPs. Our firm follows an hourly-rate billing model, because we value the quality of our work above all other considerations. Of course, we make every effort to make our fees reasonable and competitive, but our priority is the peace of mind of our clients who know that they can rely on the creativity of our legal solutions and the high quality of our work.

Contact Us Today to Schedule Your Confidential Consultation!

Introduction to Corporate Distributions | US Business Tax Law Firm

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This essay opens our new series of articles which focuses on corporate distributions. The new series will cover the classification, statutory structure and tax treatment of various types of corporation distributions, including redemptions of corporate stock. This first article seeks to introduce the readers to the overall US statutory tax structure concerning corporate distributions.

Corporation Distributions: Legal Philosophy for Varying Treatment

In the United States, the tax code provisions with respect to corporate distributions were written based on the belief that stock ownership bestows on its owner an inherent right to determine the right to receive distributions from a corporation.

Generally, a corporation can make distributions from three types of sources. First, a corporation can distribute funds from its accumulated earnings, to be even more precise accumulated Earnings and Profits (E&P). Second, a corporation may also distribute some or all of the invested capital to its shareholders. Finally, in certain circumstances, a corporation may distribute funds or property in excess of invested capital.

Moreover, certain corporate distributions may in reality be made in lieu of other types of transactions, such as payment for services. Additionally, some corporate distributions may be made in the form of stocks in the corporation, which may or may not modify the ownership of the corporation and which may or may not entitle shareholders to additional (perhaps unequal) future distribution of profits.

This varied nature of corporate distributions lays the foundation for their dissimilar tax treatment under the Internal Revenue Code (IRC).

Corporation Distributions: General Treatment under §301

IRC §301 generally governs the tax treatment of corporation distributions. This section classifies these distributions either as dividends, return of capital or capital gain (most likely, long-term capital gain). In a future article, I will discuss §301 in more detail.

Corporation Distributions: Special Case of Stock Dividends

The IRC treats distribution of stock dividends in a different manner than distribution of cash and property. Under §305(a), certain stock distributions are not taxable distributions. However, §305 contains numerous exceptions to this general rule; if any of these exceptions apply, then such stock distributions are governed by §301.

Moreover, additional exceptions to §305(a) are contained in §306. If a stock distribution is classified as a §306 stock, then the disposition of this stock will be treated as ordinary income. In a future article, I will discuss §§305 and 306 in more detail.

Corporation Distributions: Special Case of Stock Redemptions

Stock redemptions is a special kind of a corporate distribution. §317(b) defines redemption of stock as a corporation’s acquisition of “its stock from a shareholder in exchange for property, whether or not the stock so acquired is cancelled, retired, or held as treasury stock.”

§302 governs the tax treatment of stock redemptions. In general, it provides for two potential legal paths of stock redemptions. First, if a stock redemption satisfies any of the four §302(b) tests, then it will be treated as a sales transaction under §1001. Assuming that the redeemed stock satisfied the §1221 definition of a capital asset, the capital gain/loss tax provisions will apply.

On the other hand, if none of the §302(b) tests are met, then the stock redemption will be treated as a corporate distribution under §301. Again, in a future article, I will discuss stock redemptions in more detail.

Corporate Distributions in the Context of US International Tax Law

All of these tax provisions concerning corporate distributions are relevant to US shareholders of foreign corporations. In fact, in the context of US international tax law, these tax sections become even more complex and may have far graver consequences for US shareholders than under purely domestic tax law. These consequences may be in the form of higher tax burden (for example, due to an anti-deferral tax regime such as Subpart F rules) or increased compliance burden (for example, triggering the filing of international information returns such as Form 5471 or Form 926).

A failure to recognize these differences between the application of aforementioned tax provisions in the domestic context from the international one may result in the imposition of severe IRS noncompliance penalties.

Contact Sherayzen Law Office for Professional Tax Help Concerning Corporation Distributions

Sherayzen Law Office is an international tax law firm highly-experienced in US and foreign corporate transactions, including corporate distributions. We have helped our clients around the world not only to engage in proper US tax planning concerning cash, property and stock distributions from US and foreign corporations, but also resolve any prior US tax noncompliance issues (including conducting offshore voluntary disclosures). We can help you!

Contact Us Today to Schedule Your Confidential Consultation!

Critical Business Exemption | Minnesota Shelter-In-Place Order

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On March 25 , 2020, the Honorable Tim Walz, Governor of the State of Minnesota, issued a “Shelter-In-Place” Emergency Executive Order 20-20. The Executive Order mandates all persons in Minnesota to stay at home or in their place residence, unless they go out to engage in certain activities or do work for a business which is designated as a critical business (in some states, critical business is called “essential business”). I will first discuss the definition of the critical business exemption and its importance; then, I will provide a list of industries that fall under the critical business exemption based on NAICS codes.

Critical Business Exemption: Importance

The critical business exemption is very important for many business and tax reasons. Let’s briefly discuss the two most important of them.

First, from a business perspective, it is very important for business to continue to operate; a shutdown of two weeks may deal a critical blow to a business’ ability to remain profitable and meet all of its clients’ demands. Hence, the very existence of a business may depend on its eligibility for a critical business exemption.

Second, a non-exempt business will have to make a tough choice between laying off all of its employees and paying forced leave of absence. Prior to April 1, 2020, the forced leave of absence will not be compensated by the federal government. Starting April 1, 2020, however, pursuant to the Families First Coronavirus Response Act (“FFCRA”), employees are entitled to certain paid leave as well as potentially expanded family and medical leave for COVID-19 related reasons. In return, eligible employers will receive a compensation from the federal government in the form of a Paid Sick Leave Tax Credit.

These are just two of numerous examples of the importance of the critical business exemption.

Critical Business Exemption: Definition Sources

In order for a business to exempt its workers from the requirements of the Governor’s Executive Order 20-20, two conditions must be satisfied: (1) a business must fall within the definition of a critical business, and (2) a worker cannot perform work duties from home.

There are three resources that provide guidance to help you determine if your business is in a critical industry:

  1. The U.S. Department of Homeland Security’s Memorandum on Identification of Essential Critical Infrastructure Workers During COVID-19 Response (“CISA”). This is the federal government’s definition of critical industries.
  2. The aforementioned is Governor’s Executive Order 20-20. The order sets forth all sources of the critical business exemption definition as well as certain general categories of exempt businesses.
  3. The designation of critical industries based on NAICS Codes. This the most detailed and most comprehensive list of critical industries for many businesses. I provided the list below as it existed as of March 26, 2020.

The analysis should start from CISA categories. If your business does not fall within any of the CISA categories, then you proceed with the examination of the categories listed in the Executive Order 20-20. Finally, if neither of the first two sources provides an answer (for example, if you are a tax accountant, this would be the case), then you need to look at the NAICS Codes. If your business falls within any of the critical industry categories described in either of these documents, then, you will satisfy the first condition for exempting your workers from Minnesota Shelter-in-Place order.

Critical Business Exemption: Inability to Perform Work Duties from Home

If a business belongs to one of the critical industries, an employee can leave home to work only if he cannot perform his duties from home. It is important to understand that Executive Order 20-20 requires all employees who can work from home to do so, even if they are eligible for a critical business exemption.

Critical Business Exemption: NAICS Codes

For the convenience of the readers, I provided this list of companies eligible (and ineligible) for Minnesota critical business exemption based on NAICS Codes. This list was originally published by MN DEED (Minnesota Department of Employment and Economic Development); it is up-to-date through March 26, 2020.

As a Minnesota-based US international tax law firm which deals with highly-confidential information, Sherayzen Law Office falls within an exemption under NAICS code 5412.

Industry Description Industry Code Critical Industry
Oilseed and Grain Farming 1111 YES
Vegetable and Melon Farming 1112 YES
Fruit and Tree Nut Farming 1113 YES
Greenhouse, Nursery, and Floriculture Production 1114 YES
Other Crop Farming 1119 YES
Cattle Ranching and Farming 1121 YES
Hog and Pig Farming 1122 YES
Poultry and Egg Production 1123 YES
Other Animal Production 1129 YES
Timber Tract Operations 1131 YES
Forest Nurseries and Gathering of Forest Products 1132 YES
Logging 1133 YES
Fishing 1141 YES
Hunting and Trapping 1142 YES
Support Activities for Crop Production 1151 YES
Support Activities for Animal Production 1152 YES
Support Activities for Forestry 1153 YES
Oil and Gas Extraction 2111 YES
Metal Ore Mining 2122 YES
Nonmetallic Mineral Mining and Quarrying 2123 NO
Support Activities for Mining 2131 YES
Residential Building Construction 2361 YES
Nonresidential Building Construction 2362 YES
Utility System Construction 2371 YES
Land Subdivision 2372 YES
Highway, Street and Bridge Construction 2373 YES
Other Heavy and Civil Engineering Construction 2379 YES
Foundation, Structure and Building Exterior Contractors 2381 YES
Building Equipment Contractors 2382 YES
Building Finishing Contractors 2383 YES
Other Specialty Trade Contractors 2389 YES
Grain and Oilseed Milling 3112 YES
Sugar and Confectionery Product Manufacturing 3113 YES
Fruit and Vegetable Preserving and Specialty Food Manufacturing 3114 YES
Dairy Product Manufacturing 3115 YES
Animal Slaughtering and Processing 3116 YES
Bakeries and Tortilla Manufacturing 3118 YES
Other Food Manufacturing 3119 YES
Beverage Manufacturing 3121 YES
Fabric Mills 3132 NO
Textile Furnishings Mills 3141 NO
Other Textile Product Mills 3149 NO
Cut and Sew Apparel Manufacturing 3152 NO
Leather and Hide Tanning and Finishing 3161 NO
Sawmills and Wood Preservation 3211 NO
Veneer, Plywood and Engineered Wood Product Manufacturing 3212 NO
Other Wood Product Manufacturing 3219 YES
Pulp, Paper and Paperboard Mills 3221 YES
Converted Paper Product Manufacturing 3222 YES
Printing and Related Support Activities 3231 NO
Petroleum and Coal Products Manufacturing 3241 YES
Basic Chemical Manufacturing 3251 YES
Resin, Synthetic Rubber and Artificial Synthetic Fibers and Filaments Manufacturing 3252 NO
Pesticide, Fertilizer and Other Agricultural Chemical Manufacturing 3253 YES
Pharmaceutical and Medicine Manufacturing 3254 YES
Paint, Coating and Adhesive Manufacturing 3255 NO
Soap, Cleaning Compound and Toilet Preparation Manufacturing 3256 YES
Other Chemical Product and Preparation Manufacturing 3259 YES
Plastics Product Manufacturing 3261 YES
Rubber Product Manufacturing 3262 YES
Glass and Glass Product Manufacturing 3272 NO
Cement and Concrete Product Manufacturing 3273 NO
Other Nonmetallic Mineral Product Manufacturing 3279 NO
Steel Product Manufacturing from Purchased Steel 3312 YES
Alumina and Aluminum Production and Processing 3313 YES
Foundries 3315 YES
Forging and Stamping 3321 YES
Cutlery and Handtool Manufacturing 3322 NO
Industry Description Industry Code Critical Industry
Architectural and Structural Metals Manufacturing 3323 NO
Boiler, Tank and Shipping Container Manufacturing 3324 YES
Hardware Manufacturing 3325 NO
Spring and Wire Product Manufacturing 3326 NO
Machine Shops, Turned Product and Screw, Nut and Bolt Manufacturing 3327 YES
Coating, Engraving, Heat Treating and Allied Activities 3328 NO
Other Fabricated Metal Product Manufacturing 3329 NO
Agriculture, Construction and Mining Machinery Manufacturing 3331 YES
Industrial Machinery Manufacturing 3332 YES
Commercial and Service Industry Machinery Manufacturing 3333 YES
Ventilation, Heating, Air-Conditioning and Commercial Refrigeration Equipment Manufacturing 3334 YES
Metalworking Machinery Manufacturing 3335 NO
Engine, Turbine and Power Transmission Equipment Manufacturing 3336 NO
Other General Purpose Machinery Manufacturing 3339 NO
Computer and Peripheral Equipment Manufacturing 3341 YES
Communications Equipment Manufacturing 3342 YES
Audio and Video Equipment Manufacturing 3343 YES
Semiconductor and Other Electronic Component Manufacturing 3344 YES
Navigational, Measuring, Electromedical and Control Instruments Manufacturing 3345 YES
Manufacturing and Reproducing Magnetic and Optical Media 3346 NO
Electrical Equipment Manufacturing 3353 YES
Other Electrical Equipment and Component Manufacturing 3359 YES
Motor Vehicle Manufacturing 3361 NO
Motor Vehicle Body and Trailer Manufacturing 3362 NO
Motor Vehicle Parts Manufacturing 3363 NO
Aerospace Product and Parts Manufacturing 3364 NO
Railroad Rolling Stock Manufacturing 3365 NO
Ship and Boat Building 3366 NO
Other Transportation Equipment Manufacturing 3369 NO
Household and Institutional Furniture and Kitchen Cabinet Manufacturing 3371 NO
Office Furniture (including Fixtures) Manufacturing 3372 NO
Other Furniture Related Product Manufacturing 3379 NO
Medical Equipment and Supplies Manufacturing 3391 YES
Other Miscellaneous Manufacturing 3399 NO
Electric Power Generation, Transmission and Distribution 2211 YES
Natural Gas Distribution 2212 YES
Water, Sewage and Other Systems 2213 YES
Motor Vehicle and Motor Vehicle Parts and Supplies Merchant Wholesalers 4231 YES
Furniture and Home Furnishing Merchant Wholesalers 4232 NO
Lumber and Other Construction Materials Merchant Wholesalers 4233 YES
Professional and Commercial Equipment and Supplies Merchant Wholesalers 4234 YES
Metal and Mineral (except Petroleum) Merchant Wholesalers 4235 YES
Electrical and Electronic Goods Merchant Wholesalers 4236 YES
Hardware, Plumbing, Heating Equipment and Supplies Merchant Wholesalers 4237 YES
Machinery, Equipment and Supplies Merchant Wholesalers 4238 YES
Miscellaneous Durable Goods Merchant Wholesalers 4239 NO
Paper and Paper Product Merchant Wholesalers 4241 YES
Drugs and Druggists’ Sundries Merchant Wholesalers 4242 YES
Apparel, Piece Goods and Notions Merchant Wholesalers 4243 NO
Grocery and Related Product Merchant Wholesalers 4244 YES
Farm Product Raw Material Merchant Wholesalers 4245 YES
Chemical and Allied Products Merchant Wholesalers 4246 YES
Petroleum and Petroleum Products Merchant Wholesalers 4247 YES
Beer, Wine and Distilled Alcoholic Beverage Merchant Wholesalers 4248 YES
Miscellaneous Nondurable Goods Merchant Wholesalers 4249 YES
Wholesale Electronic Markets, Agents and Brokers 4251 YES
Automobile Dealers 4411 NO
Other Motor Vehicle Dealers 4412 NO
Automotive Parts, Accessories and Tire Stores 4413 YES
Furniture Stores 4421 NO
Home Furnishings Stores 4422 NO
Electronics and Appliance Stores 4431 NO
Building Material and Supplies Dealers 4441 YES
Lawn and Garden Equipment and Supplies Stores 4442 NO
Grocery Stores 4451 YES
Specialty Food Stores 4452 YES
Beer, Wine and Liquor Stores 4453 YES
Health and Personal Care Stores 4461 YES
Industry Description Industry Code Critical Industry
Gasoline Stations 4471 YES
Clothing Stores 4481 NO
Shoe Stores 4482 NO
Jewelry, Luggage and Leather Goods Stores 4483 NO
Sporting Goods, Hobby and Musical Instrument Stores 4511 NO
Book, Periodical and Music Stores 4512 NO
Department Stores 4522 YES
General Merchandise Stores, including Warehouse Clubs and Supercenters 4523 YES
Florists 4531 NO
Office Supplies, Stationery and Gift Stores 4532 NO
Used Merchandise Stores 4533 NO
Other Miscellaneous Store Retailers 4539 NO
Electronic Shopping and Mail-Order Houses 4541 NO
Vending Machine Operators 4542 NO
Direct Selling Establishments 4543 NO
Scheduled Air Transportation 4811 YES
Nonscheduled Air Transportation 4812 YES
Rail Transportation 4821 YES
Deep Sea, Coastal and Great Lakes Water Transportation 4831 YES
Inland Water Transportation 4832 YES
General Freight Trucking 4841 YES
Specialized Freight Trucking 4842 YES
Urban Transit Systems 4851 YES
Taxi and Limousine Service 4853 YES
School and Employee Bus Transportation 4854 YES
Other Transit and Ground Passenger Transportation 4859 YES
Pipeline Transportation of Crude Oil 4861 YES
Pipeline Transportation of Natural Gas 4862 YES
Other Pipeline Transportation 4869 YES
Scenic and Sightseeing Transportation, Land 4871 NO
Scenic and Sightseeing Transportation, Water 4872 NO
Support Activities for Air Transportation 4881 YES
Support Activities for Rail Transportation 4882 YES
Support Activities for Water Transportation 4883 YES
Support Activities for Road Transportation 4884 YES
Freight Transportation Arrangement 4885 YES
Other Support Activities for Transportation 4889 YES
Postal Service 4911 YES
Couriers 4921 YES
Local Messengers and Local Delivery 4922 YES
Warehousing and Storage 4931 YES
Newspaper, Periodical, Book and Directory Publishers 5111 YES
Software Publishers 5112 YES
Motion Picture and Video Industries 5121 NO
Sound Recording Industries 5122 NO
Radio and Television Broadcasting 5151 YES
Cable and Other Subscription Programming 5152 YES
Telecommunications Resellers 5173 YES
Data Processing, Hosting and Related Services 5182 YES
Other Information Services 5191 YES
Monetary Authorities – Central Bank 5211 YES
Depository Credit Intermediation 5221 YES
Nondepository Credit Intermediation 5222 YES
Activities Related to Credit Intermediation 5223 YES
Securities and Commodity Contracts Intermediation and Brokerage 5231 YES
Securities and Commodity Exchanges 5232 YES
Other Financial Investment Activities 5239 YES
Insurance Carriers 5241 YES
Agencies, Brokerages and Other Insurance Related Activities 5242 YES
Lessors of Real Estate 5311 YES
Offices of Real Estate Agents and Brokers 5312 YES
Activities Related to Real Estate 5313 YES
Automotive Equipment Rental and Leasing 5321 NO
Consumer Goods Rental 5322 NO
General Rental Centers 5323 NO
Commercial and Industrial Machinery and Equipment Rental and Leasing 5324 NO
Lessors of Nonfinancial Intangible Assets (except Copyrighted Works) 5331 NO
Legal Services 5411 YES
Industry Description Industry Code Critical Industry
Accounting, Tax Preparation, Bookkeeping and Payroll Services 5412 YES
Architectural, Engineering and Related Services 5413 YES
Specialized Design Services 5414 NO
Computer Systems Design and Related Services 5415 YES
Management, Scientific and Technical Consulting Services 5416 YES
Scientific Research and Development Services 5417 YES
Advertising and Related Services 5418 NO
Other Professional, Scientific and Technical Services 5419 YES
Management of Companies and Enterprises 5511 YES
Office Administrative Services 5611 NO
Facilities Support Services 5612 YES
Employment Services 5613 NO
Business Support Services 5614 NO
Travel Arrangement and Reservation Services 5615 NO
Investigation and Security Services 5616 YES
Services to Buildings and Dwellings 5617 YES
Other Support Services 5619 NO
Waste Collection 5621 YES
Waste Treatment and Disposal 5622 YES
Remediation and Other Waste Management Services 5629 YES
Elementary and Secondary Schools 6111 YES
Junior Colleges 6112 YES
Colleges, Universities and Professional Schools 6113 YES
Business Schools and Computer and Management Training 6114 YES
Technical and Trade Schools 6115 YES
Other Schools and Instruction 6116 YES
Educational Support Services 6117 YES
Offices of Physicians 6211 YES
Offices of Dentists 6212 YES
Offices of Other Health Practitioners 6213 YES
Outpatient Care Centers 6214 YES
Medical and Diagnostic Laboratories 6215 YES
Home Health Care Services 6216 YES
Other Ambulatory Health Care Services 6219 YES
General Medical and Surgical Hospitals 6221 YES
Psychiatric and Substance Abuse Hospitals 6222 YES
Specialty (except Psychiatric and Substance Abuse) Hospitals 6223 YES
Nursing Care Facilities (Skilled Nursing Facilities) 6231 YES
Residential Intellectual and Developmental Disability, Mental Health and Substance Abuse Facilities 6232 YES
Continuing Care Retirement Communities and Assisted Living Facilities for the Elderly 6233 YES
Other Residential Care Facilities 6239 YES
Individual and Family Services 6241 YES
Community Food and Housing and Emergency and Other Relief Services 6242 YES
Vocational Rehabilitation Services 6243 YES
Child Day Care Services 6244 YES
Performing Arts Companies 7111 NO
Spectator Sports 7112 NO
Promoters of Performing Arts, Sports, and Similar Events 7113 NO
Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures 7114 NO
Independent Artists, Writers and Performers 7115 NO
Museums, Historical Sites and Similar Institution 7121 NO
Amusement Parks and Arcades 7131 NO
Gambling Industries 7132 NO
Other Amusement and Recreation Industries 7139 NO
Traveler Accommodation 7211 NO
RV (Recreational Vehicle) Parks and Recreational Camps 7212 YES
Rooming and Boarding Houses 7213 NO
Special Food Services 7223 YES
Drinking Places (Alcoholic Beverages) 7224 NO
Restaurants 7225 YES
Automotive Repair and Maintenance 8111 YES
Electronic and Precision Equipment Repair and Maintenance 8112 NO
Commercial and Industrial Machinery and Equipment (except Automotive and Electronic) Repair and Maintenance 8113 NO
Personal and Household Goods Repair and Maintenance 8114 NO
Personal Care Services 8121 NO
Death Care Services 8122 YES
Drycleaning and Laundry Services 8123 YES
Other Personal Services 8129 YES
Industry Description Industry Code Critical Industry
Religious Organizations 8131 YES
Grantmaking and Giving Services 8132 NO
Social Advocacy Organizations 8133 NO
Civic and Social Organizations 8134 NO
Business, Professional, Labor, Political and Similar Organizations 8139 NO
Private Households 8141 YES
Executive, Legislative and Other General Government Support 9211 YES
Justice, Public Order and Safety Activities 9221 YES
Administration of Human Resource Programs 9231 YES
Administration of Environmental Quality Programs 9241 YES
Administration of Housing Programs, Urban Planning and Community Development 9251 YES
Administration of Economic Programs 9261 YES
Space Research and Technology 9271 NO
National Security and International Affairs 9281 YES