International Tax Audit: Defend Against IRS Overseas Penalties
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International Tax Audit
International Tax Audit: The IRS has increased enforcement of foreign account, asset and income compliance. When the Internal Revenue Service launches an exam against a taxpayer for overseas money, it is generally referred to as an International Tax Audit.
With these types of exams, the IRS seeks to obtain penalties for unreported income, along with penalties for non-reporting of offshore accounts, assets and investments.
Foreign money penalties can be steep, so if you find yourself at the receiving-end of an international tax audit, you should consult with experienced counsel before making an representations to the IRS.
Defending Against IRS Overseas Penalties
An International Tax Audit (e.g., audit of income generated from assets or accounts abroad) can be a scary ordeal — especially because of the additional time the IRS has to audit certain types of income generated abroad. Over the last year, the Internal Revenue Service has made the enforcement of Overseas, Foreign, and Offshore Assets via International Tax Audits — a key enforcement priority.
Since the IRS has made offshore and foreign related matters a key enforcement priority, the U.S. government as a whole has modified the rules when it comes to foreign related income being generated from certain foreign accounts or assets.
In these types of situations, in which more than $5,000 is being generated from foreign related accounts or assets, the time for the IRS to audit you doubles — and extends to six years.
While the typical statue of limitations is 3-years from the date of filing (unless the filing is made prior to the April deadline in which the Statute commences from the April filing date, the IRS can extend the time to audit to 6-years.
And, when it comes to foreign income, the threshold requirements for extending the statute of limitations is relatively low.
6-Year Statute of Limitations
Substantial omission of items
Except as otherwise provided in subsection (c)—
(1) Income taxes: In the case of any tax imposed by subtitle A—
(A)General rule: If the taxpayer omits from gross income an amount properly includible therein and—
- such amount is in excess of 25 percent of the amount of gross income stated in the return, or
- (ii)such amount—
(I) is attributable to one or more assets with respect to which information is required to be reported under section 6038D (or would be so required if such section were applied without regard to the dollar threshold specified in subsection (a) thereof and without regard to any exceptions provided pursuant to subsection (h)(1) thereof), and
(II) is in excess of $5,000,
the tax may be assessed, or a proceeding in court for collection of such tax may be begun without assessment, at any time within 6 years after the return was filed.
Sometimes it can be Longer
There are 3 main instances in which the IRS statute of limitations may have no limitation:
False Return
Willful Attempt to Evade Tax
In case of a willful attempt in any manner to defeat or evade tax imposed by this title (other than tax imposed by subtitle A or B), the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
No Return
In the case of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time.
What Should You Do?
Everyone makes mistakes. If at some point you realize that you should have been reporting your foreign income, accounts, assets or investments, the prudent and least costly (but most effective) method for getting compliance is through one of the approved IRS offshore voluntary disclosure programs.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.