IRS, DOJ Not Alone In Seeking U.S. Taxpayers With Foreign Accounts: US Taxpayers With Undisclosed Bank Accounts Should Hire U.S. Tax Attorneys

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Kevin Thorn, Managing Partner of Thorn Law Group, comments on the recent trend of CPAs, enrolled agents and foreign attorneys seeking to represent US taxpayers with undisclosed foreign accounts before the IRS and DOJ. Thorn cautions this may not result in the best representation for the taxpayer, adding, “U.S. taxpayers with undisclosed overseas bank accounts will need an experienced tax attorney to get back into compliance.”

Kevin E. Thorn

Experienced U.S. tax attorneys are best qualified to assess a taxpayer’s situation for disclosure options as well as civil and criminal defenses.

Increasingly, U.S. taxpayers with foreign bank accounts are being courted by CPAs, enrolled agents and foreign attorneys looking to represent them before the IRS as more and more foreign banks are disclosing U.S. accountholder identities and account information to the U.S. government. Enrolled agents, CPAs and foreign attorneys may not provide the strongest defense. Given the serious consequences for not disclosing foreign accounts and assets, taxpayers should give serious consideration to finding the right representation in their foreign account disclosures.

Most people do not realize that a U.S. taxpayer who maintains an undisclosed overseas bank account is committing a felony. This should not be taken lightly. If the IRS learns of a U.S. taxpayer with undisclosed foreign accounts or other hidden foreign assets, it can lead to substantial civil penalties, and a criminal investigation, which in turn can lead to a federal prosecution by the Internal Revenue Service (“IRS”) and Department of Justice ("DOJ").

Using a CPA, enrolled agent or foreign attorney to handle a foreign account or asset disclosure may be a mistake because CPAs, enrolled agents and foreign attorneys do not have experience analyzing U.S. tax law or negotiating – and if necessary, litigating – with the IRS and DOJ. They are frequently unaware of many U.S. tax laws and procedures that may offer either relief or increased risk to U.S. taxpayers with overseas accounts, which may make the situation more costly for the U.S. taxpayer.

In contrast, experienced U.S. tax attorneys are best qualified to assess a taxpayer’s situation for disclosure options as well as to provide the best defenses to civil and criminal charges. Thus, a U.S. taxpayer with an undisclosed foreign account should hire their own U.S. tax counsel to make sure that all of their rights are fully protected and are taken into consideration, because if a U.S. taxpayer has an undisclosed overseas bank account, and it is not properly brought into compliance, the taxpayer may face felony charges with severe monetary penalties, and possible incarceration.

Kevin E. Thorn, Managing Partner of Thorn Law Group, and a U.S. tax attorney who represents hundreds of U.S. citizens with offshore accounts and business interests, says he has noticed an increase in taxpayers coming to him for advice after a CPA, enrolled agent or foreign attorney has given them incorrect information or improper advice and harmed their case.

He also says he has noticed a recent increase in foreign banks recommending U.S. accountholders hire the bank’s counsel to handle the accountholder’s disclosure. Many foreign banks are disclosing the identities and account information of their U.S. accountholders to the U.S. government. [See “U.S. says has 106 Swiss requests to join anti-tax-dodging deal" Reuters, January 25, 2014, at] In most cases, this is the result of a deal between the bank and the DOJ intended to protect the foreign bank’s interests. [Joint Statement between U.S. Department of Justice and the Swiss Federal Department of Finance, signed Aug, 29, 2013,

After agreeing to turn over the U.S. accountholder's information to the U.S. government, many foreign banks send a letter notifying the U.S. taxpayer of the imminent disclosure and advising them to seek counsel. Often, the foreign bank recommends its own counsel. Thorn cautions U.S. taxpayers with undisclosed overseas bank accounts should not use an attorney that has been recommended by the foreign bank, because sometimes this could be the exact same law firm that is representing the bank, causing a conflict of interest.

Kevin Thorn states that “U.S. taxpayers with undisclosed offshore accounts should hire a U.S. tax attorney with IRS voluntary disclosure experience to come into compliance with the IRS immediately. The IRS and DOJ are actively prosecuting U.S. persons they find with hidden foreign accounts, as well as U.S. taxpayers with undisclosed foreign companies and trusts.” Mr. Thorn recommends eligible American taxpayers to enter the IRS Offshore Voluntary Disclosure program to settle their issues. He points out that the penalty for not disclosing offshore accounts, trusts or companies can be devastating. “The best way to avoid criminal prosecution and protect your interests is to come forward and make a voluntary disclosure of foreign assets to the IRS.”

Thorn also cautions that the longer taxpayers wait, the more likely they will become ineligible for the Amnesty Program as the IRS will have learned of their foreign accounts from the banks. For these taxpayers, experienced representation is essential as they will not be able to avail themselves of the OVDI’s protections. Notes Thorn, “outside of the OVDI, the IRS and DOJ can pursue extensive audits, higher penalties and even prosecution.”

Thorn Law Group, PLLC is a law firm dedicated to helping clients resolve complicated tax, criminal tax, and international tax problems.

Kevin E. Thorn
Managing Partner Thorn Law Group, PLLC

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