Posts

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

/in , /by

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!

Swiss Bank Program Summary | Offshore Accounts Lawyer

/0 Comments/in /by

On December 29, 2016, the US Department of Justice (“DOJ”) and the IRS announced that they have reached final resolutions with Swiss banks that have met the requirements of the Swiss Bank Program. In this article, I would like to provide the Swiss Bank Program summary and explain the importance of the Program to the overall US international tax enforcement efforts.

Swiss Bank Program Summary: History of the Swiss Bank Program

The Swiss Bank Program was a groundbreaking initiative of the DOJ and the IRS. It was the very first time when the tax authorities of one country (United States) conducted a voluntary disclosure program for banks in a different country (Switzerland) as if it were not an independent sovereign territory.

At the core of the Swiss Bank Program was the promise of the DOJ not to prosecute Swiss banks that would come forward and participate in the Swiss Bank Program. The banks were divided into four categories.

Category 1 banks were not eligible to participate because they were already under the DOJ investigation.

Category 2 banks had to pay a penalty and consisted of banks for which was a reason to believe that they committed tax-related criminal offenses with respect to undisclosed foreign accounts owned by US persons. In addition to paying a penalty, Category 2 banks also had to disclose all of their cross-border activities and provide detailed information with respect to US-owned accounts to the DOJ and the IRS.

Category 3 consisted of banks that established, with the assistance of an independent internal investigation of their cross-border business, that they did not commit tax or monetary transaction-related offenses and had an effective compliance program in place. These banks did not pay any penalties.

Finally, category 4 was reserved for Swiss banks that were able to demonstrate that they met certain criteria for deemed-compliance under the Foreign Account Tax Compliance Act (FATCA). They also did not pay any penalties.

Swiss Bank Program Summary: Results

Let’s discuss the results of the Program in our Swiss Bank Program summary. The Swiss Bank Program was announced on August 29, 2013 and it was in operation until December 29, 2016. During that time the DOJ executed non-prosecution agreements with 80 Category 2 banks and collected more than $1.36 billion in penalties. The Department also signed a non-prosecution agreement with Finacor, a Swiss asset management firm. Between July and December 2016, four banks and one bank cooperative satisfied the requirements of Category 3, making them eligible for Non-Target Letters. No banks qualified under Category 4 of the Program.

Swiss Bank Program Summary: Legacy

No Swiss Bank Program summary would be complete without a discussion of the legacy of the Program. In our Swiss Bank Program summary, let’s divide the impact of the Program into four parts: impact on Switzerland as a bank secrecy fortress, impact on other tax havens, impact on US tax compliance and the precedent for the future.

The most immediate impact was felt in Switzerland itself. The Swiss Bank Program has in effect completely destroyed the vaunted Swiss bank secrecy laws with respect to US taxpayers and gave the green light to other European countries to conduct similar interventions. In essence, the Swiss Bank Program has completely destroyed the main fortress of bank secrecy that had existed for centuries.

The destruction of the Swiss bank secrecy laws also influenced the other tax havens. Fearing a similar DOJ intervention, the rest of the world’s tax havens have significantly softened their own bank secrecy laws and have agreed to an automatic exchange of information regarding their account owners with the IRS. There can be no doubt that the Swiss Bank Program has greatly facilitated the implementation of FATCA on the global scale.

The combined effect of the Swiss Bank Program, the softening of the bank secrecy laws in tax havens and the implementation of FATCA was acutely felt by noncompliant US taxpayers. Tens of thousands of US taxpayers participated in the IRS voluntary disclosure programs (often, they were urged by the Swiss banks to enter the OVDP, because this is how the banks mitigated their own penalties under the Program). Many more tens of thousands of taxpayers became tax compliant through a noisy or quiet disclosure. The greater awareness of US international tax laws among the tax preparers has greatly improved US annual tax compliance, bringing huge amounts of additional revenue to the US treasury.

Finally, no Swiss Bank Program summary would be complete without mentioning the potential for repetition of the Swiss Bank Program in another country. It may not necessarily come in the same format, but it is very likely that a version of the Program will be implemented elsewhere, especially since the IRS commitment to offshore tax compliance will remain a priority in the immediate future.

Contact Sherayzen Law Office for Help With Your Undisclosed Foreign Accounts

If you have undisclosed foreign accounts or other foreign assets, contact Sherayzen Law Office for professional help. Our legal team will thoroughly analyze your case, explore your voluntary disclosure options, prepare all of the necessary legal documents and tax forms, and defend your case against the IRS.

We have helped hundreds of US taxpayers to bring their tax affairs into full compliance and we can help you! Contact Us Today to Schedule Your Confidential Consultation!