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Taylor Lohmeyer Law Firm Clients Face Potential IRS Audit | FBAR News

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On May 15, 2019, a Texas federal court ruled that the IRS can enforce a John Doe Summons for client information from Taylor Lohmeyer Law Firm because the firm failed to demonstrate that the attorney-client privilege protected this information. This is bad news for Taylor Lohmeyer Law Firm clients who now may have to face a potential IRS audit.

How and Why Taylor Lohmeyer Law Firm Clients Face IRS Pressure

This entire affair arose as a result of an IRS audit of an unnamed client of Taylor Lohmeyer law firm. During the audit, the IRS determined that this client owed more than $2 million in taxes with respect to about $5 million of undisclosed foreign income.

Moreover, the IRS agent who conducted the audit discovered that the taxpayer received an advice from Taylor Lohmeyer law firm with respect to evasion of US taxes on his foreign income. It appears that the IRS agent also received additional information confirming the involvement of the firm in illegal tax-avoidance schemes from a former partner of the firm.

As a result, the IRS agent was able to build the case that Taylor Lohmeyer law firm helped its clients build offshore trust structures and beneficial ownership schemes for the purpose of evading US taxes. The IRS then made the logical conclusion that other Taylor Lohmeyer law firm clients may have used the firm to hide their taxable income in foreign jurisdictions through foreign bank accounts and foreign entities.

Why the Court Approved the John Doe Summons for the Identities of Taylor Lohmeyer Law Firm Clients

Based on this information, the court ruled that the government had sufficient evidence to establish that the summons was made with the legitimate purpose of combating tax evasion. The court also said that the burden to show the government made a wrongful summons was on the Taylor Lohmeyer law firm, and the firm failed to satisfy its burden of proof.

It was not just the IRS work that convinced the court to approve the IRS summons for the names of the Taylor Lohmeyer Law Firm clients. Rather, it appears that the firm was overly confident and did not properly assert the attorney-client privilege to protect its clients. The court specifically objected to what it believed to be a “blanket assertions of privilege” for the firm’s clients. It wanted the firm to establish that the attorney-client privilege applied to each specific client and each specific document.

Will There Be an Appeal?

It is not clear if the firm will appeal the court’s decision, but it appears that such an appeal would be the least that the firm can do to protect its clients. From a broader perspective, it would be too dangerous to let the IRS further chip away at the attorney-client privilege.

What Should Taylor Lohmeyer Law Firm Clients Do?

The clients of the firm should not simply wait for what happens next in this case, whether the firm will appeal the decision or simply disclose their names. They are right now in a very dangerous situation and should immediately explore their voluntary disclosure options to limit their exposure to IRS criminal penalties, including FBAR criminal penalties. Moreover, a voluntary disclosure may allow them to reduce their exposure to civil penalties.

They must also prepare for the possibility that they may not be able to do a classic voluntary disclosure and prepare for an IRS audit. Even in a willful situation, it may be possible to significantly reduce the exposure to FBAR and other IRS penalties if the case is handled correctly.

In other words, whether their earlier noncompliance was willful or non-willful, the clients of this law firm should immediately contact an international tax attorney who specializes in offshore voluntary disclosures and IRS audits.

Taylor Lohmeyer Law Firm Clients Should Contact Sherayzen Law Office for Professional Help With Their Offshore Voluntary Disclosures and IRS Audits

If you are a client of Taylor Lohmeyer law firm, contact Sherayzen Law Office for professional advice with respect to your offshore voluntary disclosure options and IRS audit preparation. Sherayzen Law Office is a highly-experienced international tax law firm with respect to both of these subjects.

Our founder is an international tax attorney who possesses deep knowledge and understanding of US international tax law and its application in the context of an IRS audit and offshore voluntary disclosures. In fact, Mr. Eugene Sherayzen has helped hundreds of US taxpayers around the world to bring their tax affairs into full compliance with US tax laws through an offshore voluntary disclosure. Moreover, he has handled a great variety of IRS audits, including audits of undisclosed offshore assets.

Contact Mr. Sherayzen Today to Schedule Your Confidential Consultation!

What to do if the IRS Audits Your Quiet Disclosure | FBAR Lawyer Madison

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This essay is concerned with a situation where the IRS audits your quiet disclosure of foreign assets and foreign income. The IRS audit can be an absolute nightmare in this case. Not only will the audit examine the accuracy of the disclosure, but the IRS may actually raise the issue of willful and non-willful FBAR penalties as well as the potential income tax fraud penalty.

So, is everything lost if the IRS audits your quiet disclosure? The answer is “no”. While the situation may undoubtedly be dire, it is not hopeless if the case is handled properly. While it is not possible to discuss in this article the whole spectrum of strategies available to taxpayers in such a situation, this article attempts to line out the three most important steps that you should do if the IRS audits your quiet disclosure.

1. If the IRS Audits Your Quiet Disclosure, You Should Not Panic

An IRS audit is always a stressful event. The stress increases exponentially if the audit involves a quiet disclosure of foreign assets and foreign income.

While your situation may be difficult, you should try to resist the panic. Panic is an emotional condition where a person starts acting irrationally and may follow a course of action that may worsen the already difficult situation.

2. If the IRS Audits Your Quiet Disclosure, Do Not Try to Handle the Audit by Yourself

Do NOT attempt to solve the IRS audit of your quiet disclosure by yourself, even if you believe that you were non-willful in your original noncompliance. This is extremely dangerous and may result in imposition of non-willful or even willful penalties. US international tax law is so complex that you may easily get yourself in trouble even if you believe that you are doing well.

There is a myth that the IRS is somehow gracious when a taxpayer represents himself and will be willing to reduce the penalties – this is completely false, especially in a situation involving a quiet disclosure. The IRS agents follow procedures and they will follow them ruthlessly until they run into a legal defense built by a lawyer. Without such a defense, there is nothing to stop the IRS from imposing penalties to the extent an agent believes is justified by the facts of the case.

3. If the IRS Audits Your Quiet Disclosure, You Should Immediately Find and Retain an International Tax Lawyer

Get yourself an international tax lawyer to help you with an IRS audit of your quiet disclosure. This can be a highly complex situation and you should have a professional by your side to guide you throughout the process. This is the best way to assure that your case will be handled properly.

In this case, a professional must be an international tax lawyer, not an accountant. I am always suspicious of cases where accountants start to go beyond their professional capacity and take on the legal defense of their clients’ cases. While it may be tolerable in simple domestic cases (though still not recommended), it may result in a horrific outcome where the IRS audits a quiet disclosure.

Sherayzen Law Office Can Be Your International Tax Lawyer if the IRS Audits Your Quiet Disclosure

If the IRS audits your quiet disclosure, consider retaining Sherayzen Law Office, Ltd. as your international tax lawyer to represent you during the IRS audit. Sherayzen Law Office is an international tax firm which focuses on helping its clients with their voluntary disclosures and the audits of these voluntary disclosures. The firm is not only a leader in the field, but it has also extensive experience in combating and reducing the IRS penalties associated with prior tax noncompliance.