Topics Covered:

1. Landmark Alaska Bar Reopens After Closed Down By IRS.

2. How The IRS Will Find You If You Have Unreported Foreign Income And Undisclosed Foreign Accounts.

3. What Signs To Be On The Lookout For That You May Be Subject To An IRS Criminal Investigation.

4. Questions From Our Listeners:

a. I used a tax preparation service to prepare my tax return and now I have been selected for an audit by IRS. Should I have my tax preparer represent me in the audit or do I hire you?

b. I filed Federal income tax returns that I now realize are incorrect. Should report this to my accountant?

c. My CPA who I have been going to for years has never told me that I had to report my foreign income. Now that I know I have to report my foreign income and disclose my foreign bank accounts, do I accept my CPA’s offer to represent me in OVDP or do I hire you?

Yes we are all working for the tax man!

Good afternoon! Welcome to the KahnTaxLaw Radio Show
This is your host Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.
You are listening to my weekly radio show where we talk everything about taxes from the ESPN 1700 AM Studio in San Diego, California.
When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!
It is my objective to make you smarter so that you legally pay the least tax as possible, avoid tax problems and be aware of the strategies and solutions if you are being targeted by the IRS or any State tax agency.
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into our website at www.kahntaxlaw.com.
I have a lot to cover today in the world of taxes and helping me out today will be my associate attorney Amy Spivey who will be calling in later in today’s show.

Today’s top story occurred in the great State of Alaska. Alaska’s economy is dominated by the oil, natural gas, and fishing industries, resources which it has in abundance. But tourism is also a significant part of the economy and that is where you can find some classic Alaska bars.

So what makes a classic Alaska bar?

A classic Alaska bar is a magical mixture — a touch of danger and a place where characters gather, featuring a strong relationship between bartender and patrons. More than fun, a classic Alaska bar is educational in a perverse sort of way. Past customers bring them up in conversation. People outside Alaska know of them.

What makes some bars unique is what used to be there before the bar existed – perhaps an old outpost or bootlegging operation or brothel.

Some of these classic Alaskan bars are set up as a dark and dank watering hole with sawdust on the floors and dollar bills and a bra or two nailed to wooden walls. While others may be more conventional. But the one thing that the classic Alaskan bars have in common is the atmosphere of the bar reflects the personality of its owner.

But as those owners get older and retire or pass away, a new crop of entrepreneurs are taking their shot at preserving legendary watering holes. One of those places is Louie’s Bar in the Southeast Juneau community of Douglas.

Louie’s Bar rose out of the ashes of the Great Douglas Fire of 1937, which incinerated downtown Douglas. Although the bar was not called Louie’s until 1974 when it was then inherited by a man named Louie Pusich.

But in 2013 Louie’s doors were closed – not because the owner died or retired. Instead it was closed by the Internal Revenue Service for nonpayment of taxes amounting to $1 million.

The Shutdown.

That’s right, P P’s Douglas Inn, formerly known as Louie’s Bar, was closed down and seized by the Internal Revenue Service for not paying federal taxes over the last fourteen years. The doors were locked, stools upturned on tables and lights dimmed just before the 2013 Independence Day holiday. Owner Patrick M. Peterson admitted that he did not pay federal taxes and knew that a shut down had to be coming.

Mr. Peterson was asked, how could he have racked up over $1 million in Federal taxes? He replied that “Paperwork is not my big suit. I just couldn’t keep up with it. Up until 1999, I had a good bookkeeper that was taking care of it for me. So, I had everything caught up with”. He then added that “staring with 1999, he did have others working on his bookkeeping and taxes but nobody came through with what I needed”.

Federal tax records showed that Peterson and his company Peterson Pacific Holdings owed nearly $1 million in back taxes. Three-quarters of that amount was in the form of unpaid quarterly employer taxes from early 1999 to the end of 2012. The rest is what the IRS calls a Trust Fund Recovery Penalty, or an attempt to recoup employees’ withholding, Medicare and Social Security taxes that the employer did not pass on to the federal government.

This is all evidenced by eleven federal tax liens totaling $997,188.16 that were filed against Peterson and his company between July 2011 and June 2013. They were for unpaid federal employer taxes during most of the reporting periods from First Quarter of 1999 to the Fourth Quarter of 2012.

Now, most business owners in this situation would look to reach a resolution with the IRS and avoid collection action or even worse – a business shutdown. But not Peterson. Instead he signed a quit claim deed for the Bar’s property to a Carol Collier of Riverview, Florida in exchange for $1.00 on May 20, 2013. This was at the same time when the City and Borough of Juneau (“CBJ”) property assessments showed the land valued at $67,900 and the structure valued at $174,100 for a combined total of $242,000. But don’t think that this transfer thwarted IRS collection action. You see when the IRS files a Federal Tax Lien, such lien follows any subsequent transfer of the property until the lien is paid in full or otherwise satisfied.

What is most unusual about Peterson’s case is that his business’ tax problems go back to 1999 – that’s about 15 years! How could the IRS have let this drag on for that long? Perhaps being in a remote location in the rugged State of Alaska made the growing Federal tax liabilities of Peterson’s business a low priority of IRS.

But the continued non-payment of such taxes is common, especially among struggling businesses. Owners of struggling businesses in financial trouble and having cash flow issues are saying “OK, if I don’t pay my suppliers, they’re not going to give me any inventory. If I don’t have any inventory, (then) I’m out of business. Just one quarter or one month and I’ll do better, and the IRS isn’t going to shut me down”. Unfortunately, when this practice continues over successive quarters, many businesses are unable to turn this around. The IRS calls this “pyramiding”.

The IRS is usually in contact with the taxpayer with almost-immediate notices and the assignment of a Revenue Officer to prevent such a huge pyramiding problem. But the eventual measures that were taken in Peterson’s case were an extraordinary step that the IRS had no choice to pursue. You see, Peterson did not owe just the IRS but also the City and Borough of Juneau (CBJ) for sales tax, CBJ for property taxes and the State of Alaska for unemployment insurance contributions.

So the IRS had no choice – it had to stop the bleeding and shut down Peterson’s business. A public auction would be later held and the proceeds applied to the back tax liability of Peterson’s business.

Reopening.

Abigail Trucano and her parents, James and Arbe Williams were unhappy that the landmark bar was forcibly closed by the IRS because of unpaid back taxes amounting to $1 million. Family members were regulars, as were many in the Southeast community of Douglas. “We thought this bar was so important to Douglas,” says Trucano. “I used to come in here all the time.”

So when the IRS auctioned the bar, the Williams’ snatched it up for $145,000 and invested heavily in its renovation. Their daughter, a co-owner, took charge of operations. Trucano had worked six years as a bartender at Juneau’s downtown tourist destination, Red Dog Saloon, dealing with swarms of cruise ship tourists.

The family contacted Louie Pusich, the former founder, obtaining his permission for the use of his name. The 76-year-old attended the grand opening in July 2014 which was reopened as Louie’s Douglas Inn.

Excited for its return, a handful of Douglas residents waited on the steps of the newly renovated Louie’s Douglas Inn a few minutes before the doors would open at 3:00 p.m. on a Tuesday. A celebratory drink was in order, certainly, but the real reason was to reunite with friends, including the new owners of the bar.

The eponymous Louie Pusich walked down the hill from his home with his wife, Doreen, to the bar he once owned. He ordered a Bud Light, which he jokingly referred to as a “Butt Light.” Looking out for his health, the 76-year-old doesn’t drink much these days.

The look of the bar has changed considerably since the renovation, with a more open layout, exposed brick, new fixtures and more. While the bar has received a makeover, there’s a lot that will remain unchanged about Louie’s Douglas Inn — it’s still the “living room of Douglas.” And not it has another great story behind it – that it was raised from the 2013 wrath of the IRS.

Well it’s time for a break but stay tuned because if you have unreported foreign income and undisclosed foreign bank accounts we have news for you on how the IRS will discover you.

You are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team on the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team.

Calling into the studio from our San Francisco Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Jeff states, if you have unreported foreign income and undisclosed foreign bank account we have news for you on how the IRS will discover you. Listen carefully because this May Be Your One Last Opportunity to Avoid Criminal Prosecution and Increased Civil Penalties!

Since July 1, 2014, the most feared U.S. legislation regarding international tax enforcement – Foreign Account Tax Compliance Act (“FATCA”) – is being implemented by most banks around the world.

Jeff asks, Amy What Is FATCA?

Amy states, FATCA was signed into law in 2010 and codified in Sections 1471 through 1474 of the Internal Revenue Code. The law was enacted in order to reduce offshore tax evasion by U.S. persons with undisclosed offshore accounts. There are two parts to FATCA – U.S. taxpayer reporting of foreign assets and income on Form 8938 and reporting by a Foreign Financial Institution (“FFI”) of foreign bank and financial accounts to the IRS.  It is the latter that is resulting in FFI’s sending out that dreaded letter to suspected U.S. account holders requesting U.S. taxpayer identification and information (referred hereafter as the “FATCA letter”).

FATCA generally requires an FFI to identify certain U.S. accountholders and report their accounts to the IRS. Such reporting is done either through an FFI Agreement directly to the IRS or through a set of local laws that implement FATCA.

If an FFI refuses to do so or otherwise does not satisfy these requirements (and is not otherwise exempt), U.S.-source payments made to the FFI may be subject to withholding under FATCA at a rate of 30%. Note that FATCA information reporting and withholding requirements generally do not apply to FFI’s that are treated as “deemed-compliant” because they present a relatively low risk of being used for tax evasion or are otherwise exempt from FATCA withholding.

Jeff states, As part of this compliance, foreign banks from around the world are sending letters to account holders that they believe have, or had, a U.S. tax nexus (or other U.S. connection) requesting information to determine whether such account holders have disclosed their foreign bank accounts to the IRS. The letters from foreign banks generally require an account holder to disclose whether the account has been declared to the IRS through the filing of a Report of Foreign Bank and Financial Accounts (commonly known as the “FBAR”) form and/or a Form 1040 personal income tax return, participation in the various IRS Offshore Voluntary Disclosure Programs, or otherwise. Sometimes foreign banks request that the account holder submit an IRS Form W-9 or W-8BEN, which is generally required to be completed by U.S. account holders for tax reporting purposes.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Seven Deadly Myths.

Jeff states so as foreign countries march inexorably towards the implementation of FATCA, there are still many people who subscribe to any one or all of the seven deadly myths that could find themselves facing potentially crippling circumstances after July 1, 2014. For safety’s sake, we get down to brass tacks and present the facts below – in plain language – to debunk these myths.

Jeff to prompt Amy to discuss each myth.

Myth 1: No action required now.

This is false. As of July 1, 2014 all FFI’s must have implemented a FATCA Compliance Program to comply with its country’s Intergovernmental Agreement (“IGA”) with the United States. FFI’s must self-certify their FATCA status [Chapter 4 of the U.S. Internal Revenue Code] to their withholding agents by either providing a Global Intermediary Identification Number (GIIN) or new IRS Form W-8BEN-E/W-8IMY prior to this date.

Myth 2: Best to “wait and see” for a foreign country’s enabling legislation.

This is false. Wishing this to be the case does not make this so. To be clear, registration and reporting are distinct functions under FATCA. All FATCA registration is directly with the IRS and is occurring now.

Registration with the IRS is free of cost and mandatory for any FFI to become registered deemed-compliant under its country’s IGA. Only the IRS has the power to register a FFI and issue a GIIN. Enabling legislation by the foreign country is irrelevant to FATCA registration for FFI’s as no foreign country revenue authority has – or will ever have – the power to register a FFI and issue a GIIN. Again, we emphasize, this must be done directly with and by the IRS.

The truth is, a foreign country’s enabling legislation is simply intended to provide the legal framework for compliance with, not avoidance of FATCA (and other automatic tax information exchange agreements), and the development of the regulatory framework for operating the agreement.

Myth 3: IRS registration may breach confidentiality.

This is false. Withholding agents already require W-8s from all FFI’s to avoid withholding liability. This is a long-established practice and the Form W-8 has simply now been revised to include FATCA status. A FFI must self-certify, under penalty of perjury, its FATCA status to withholding agents using the new W-8 before July 1, 2014. To obtain a GIIN, a FFI must file Form 8957 via the IRS Foreign Financial Institution Registration System (FRS) (or manually). Once the GIIN is obtained, it can be verified by withholding agents via FRS or submitted via Form W-8. There are no material differences between the information disclosed, or commitments made, under Form W-8 and Form 8957. Both forms are complementary and require basic identifying information about the FFI. Specific investor information is never disclosed.

Myth 4: Certain foreign investment funds may be exempted as sponsored entities.

This is false. Sponsored entity exemption would require all the sponsored FFI’s of the sponsor to use a single GIIN. If any FFI using the sponsored GIIN becomes FATCA non-compliant – for any reason – all FFI’s using the same GIIN would also become non-compliant.

Myth 5: Model 1 or Model 2 IGA’s displace U.S. Treasury Regulations.

This is false. They both work in tandem. A FFI is treated as FATCA-compliant, and not subject to FATCA withholding tax, to the extent it complies with its obligations under the IGA. The U.S. Treasury regulations are incorporated by reference into the IGA. Under the IGA, the foreign country is bound to use U.S. Treasury definitions to the extent those definitions are not defined by the IGA, and importantly, the foreign country is not permitted to use any other definition in local legislation that would “frustrate the purposes” of the IGA.

Myth 6: There is no person charged with the responsibility that a foreign bank complies with the IGA.

This is false. Under the IGA a FATCA Responsible Officer (FRO) must be appointed who is (a) as an officer of the registered deemed-compliant FFI with sufficient authority to ensure that the FFI meets the applicable registration requirements and (b) who certifies that the FFI will comply with its continuing FATCA obligations.

Myth 7: There is no incentive for FRO’s to ensure a foreign bank’s compliance under an IGA.

This is false. FRO’s have serious compliance responsibilities under FATCA. In fact, FATCA compliance revolves around the FRO, like Sarbanes Oxley compliance revolves around the CFO. Especially in the context of a FFI that does not typically have any staff, the role is even more essential. It’s a fallacy and wishful thinking that FROs can be lax or “lite” under the IGA. The IRS has consistently expressed its expectations that FRO’s deliver robust FATCA compliance and high-quality FATCA information from either procedure. Whoever says otherwise has not been paying attention and we all know how this story ended for Switzerland. Key considerations for a FRO under the IGA include:

• Willfully submitting any fraudulent or materially false document to the IRS is a Federal offence. [IRC §§7206(2) & 7207]
• FFI’s self-certification as a Reporting Financial Institution to withholding agents will entail signing the IRS Form W-8 under penalties of perjury.

The Truth About FATCA.

Jeff states, Whether out of lack of knowledge, preparedness or self-interest, those who are propagating these myths are not doing themselves or their U.S. clients any favors. All information from the foreign banks including those U.S. accountholders refusing to cooperate will be furnished to the IRS. The IRS will then look to see if your account ever had in excess of a $10,000 balance. If it did and you did not report it on an FBAR or on your federal income taxes, the case will likely be referred to the IRS Criminal Investigation Division. At that point, the government will begin to build a case against you. A U.S. citizen can be sentenced up to five years in prison for each year that they willfully failed to file an FBAR and can be penalized up to 50% of the balance of the foreign account for each year that they willfully failed to report (up to 250% of the account’s balance). The civil penalties alone can easily reach double the amount of the balance of the account in question.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned because after the break we are going to tell you What Signs To Be On The Lookout For That You May Be Subject To An IRS Criminal Investigation.

You are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team on the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team.

And on the phone from our San Francisco office I have my associate attorney, Amy Spivey.

Jeff says, so in this segment we are talking about what Signs To Be On The Lookout For That You May Be Subject To An IRS Criminal Investigation.

A simple mistake, oversight, or your accountant’s malpractice may trigger an IRS criminal investigation. Specifically, unreported income, a false statement, the use of an impermissible accounting or banking service, or declaring too many deductions are things that could initiate an audit, which could then rise to the level of an IRS criminal investigation.

Amy says, the IRS is the world’s most powerful collection agency, with tremendous resources, and its Criminal Investigation Division (CID) is ruthless. Its goal is singular: to conduct a thorough investigation of the taxpayer who has engaged in tax fraud so that he can be criminally prosecuted.

A criminal investigation differs from an audit. With an audit, the IRS attempts to determine whether you have calculated your tax liability correctly. With a criminal investigation, the IRS seeks to mount a case against you so that the U.S. Department Of Justice can prosecute you and hold you out as an example to others as to what will happen if you cheat the government.

Jeff asks, Amy what can you tell us about the IRS Criminal Investigation Process?

The IRS criminal investigation process is serious business. CID is composed of federal agents (called “Special Agents”), who are highly trained financial investigators that carry a gun and wear a badge. Unlike your typical police department, CID conducts a very thorough investigation which may last years while they interview your family, friends, co-workers, employees, and business associates, and bankers, among others, to acquire evidence as to the extent of the tax evasion or tax fraud that may have occurred.

Jeff says, A criminal tax violation conviction results in severe consequences, and in addition to monstrous fines, including the cost of prosecution and jail time. Each count can result in five years in jail and it could spell financial, personal and social ruin. Compounding the situation is that often a taxpayer will not know when he is subject to an IRS criminal investigation until it is in its late stages at which time they surely have made incriminating admissions if they were not represented by competent counsel.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Jeff asks Amy What are the four signs that You May Be Subject to an IRS Criminal Investigation?

Amy discusses each sign after prompted by Jeff

(1) An IRS Revenue Officer abruptly stops pursuing you after he has been requesting you to pay your IRS tax debt, and now does not return your calls. The agent might be getting ready to refer your case to the CID to investigate previous or current tax evasion or crimes you may have committed within the collection process. (i.e., making false statements, hiding income or assets).

(2) An IRS Revenue agent has been auditing you and now disappears for days or even weeks at a time. After a case is referred to the CID, both the Collection and Examination Divisions put things on “pause” because they do not want to jeopardize a successful criminal prosecution. CID is incredibly resourceful and tactful. To better position yourself against them, it is best to obtain an experienced IRS tax attorney as early as possible where criminal tax exposure is apparent in your fact pattern (like where you know you cheated on the return that is under audit). This is true even if your case is only at the civil investigation stage.

(3) Your bank informs you that your records have been summoned by the CID or subpoenaed by the U.S. Attorney’s Office.

(4) Your accountant is contacted by Special Agents, or has been subpoenaed to appear before a grand jury and told to bring your tax records. Unfortunately, the “accountant-client privilege” simply does not protect you in a criminal case and any statements made to your accountant can be used against you in a criminal investigation, either through the “discovery” process leading to trial or where the accountant is called as a witness during criminal tax trial.

Jeff states, Unlike a civil tax examination, a criminal tax investigation has little to do with the assessment of additional tax. The purposes of a criminal investigation are (1) to detect suspected criminal tax offenses and (2) to refer those offenses for criminal prosecution. The government’s goal is to obtain a conviction that results in imprisonment, fines, and/or restitution.

Jeff asks Amy, What Tax Crimes Can The IRS Charge You With?

Amy replies and discusses the different tax crimes.

Tax Evasion

This is a particularly broad, catch-all statute that subjects the taxpayer to fines of up to $100,000.00 ($500,000.00 for corporations) and imprisonment of up to 5 years for the willful attempt in any manner to evade or defeat any tax under the Internal Revenue Code. While used sparingly by the U.S. Justice Department, it nevertheless remains a potential trap for even the most innocuous and benign transgressions of the IRC.

Fraud and False Statements

Any person who makes a false or fraudulent statement, or assists another person to make a false or fraudulent statement in connection with documents submitted to the IRS, such as Form 433A or B, or an offer in compromise or a closing agreement, may be prosecuted under this statute and, if convicted, subjected to a fine of up to $100,000.00 ($500,000.00 in the case of a corporation) and imprisoned up to three years. Concealment of property from the IRS, or withholding, falsifying or destroying records, also subjects the person to prosecution under this statute.

Failure to File Returns, Supply Information, or Pay Tax

This is another broad statute that can be used to criminally convict a taxpayer for failing to file a tax return, filing an incomplete one, or not paying the tax that is due. The taxpayer may be fined $25,000.00 ($100,000.00 in the case of a corporation), plus costs of prosecution, and incarcerated up to one year in a federal prison.

Jeff states, If CID recommends prosecution, it will give its evidence to the Justice Department to decide the special charges. Individuals are typically charged with one or more of three crimes: tax evasion, filing a false return, or not filing a tax return. All of which are tax fraud. Therefore, the sooner you hire tax counsel experienced in criminal tax matters, the higher the chance that further escalation of your case in the criminal arena could be avoided or limited.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned as we will be taking some of your questions. You are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team on the KahnTaxLaw Radio Show on ESPN.

BREAK

Welcome back. This is KahnTaxLaw Radio Show on ESPN and you are listening to Jeffrey Kahn the principal tax attorney of the kahntaxlaw team along with my associate attorney, Amy Spivey.

If you would like to post a question for us to answer, you can go to our website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Amy, what questions have you pulled from the kahntaxlaw inbox for me to answer?

Eric: I used a tax preparation service to prepare my tax return and now I have been selected for an audit by IRS. Should I have my tax preparer represent me in the audit or do I hire you?

CPA’s prepare tax returns and there are a lot of CPA’s and other tax professionals who a great in preparing tax returns. A taxpayer will provide them with information and tax documents and a return will be generated for filing with the IRS. This process I refer to as “compliance”. But a tax attorney will focus on “representation” – meaning that the cases taken on by the attorney are when the IRS is questioning a return or making other civil or even criminal inquiries of a taxpayer.

A tax attorney being familiar with the “representation” aspect, knows who to speak to at IRS and how to best present your case. The tax attorney can also devote full attention to your attention at any time since the tax attorney’s workload is not jammed like the CPA’s workload during tax season who is busy with tax return preparation and more focused over meeting filing deadlines and therefore cannot provide the needed attention to your case.

Bob: I filed Federal income tax returns that I now realize are incorrect. Should report this to my accountant?

The filing of a false tax return is a criminal tax offense so you need to be careful who you speak with for advise. A taxpayer who consults with a tax attorney also gets the benefit of attorney-client privilege. This benefit allows that taxpayer to freely discuss with his attorney any matters or issues without the threat of these communications being disclosed to the government or anyone else. You do not get this level of privilege when dealing with non-attorneys.

Sanjay: My CPA who I have been going to for years has never told me that I had to report my foreign income. Now that I know I have to report my foreign income and disclose my foreign bank accounts, do I accept my CPA’s offer to represent me in OVDP or do I hire you?

Taxpayers looking to come forward in a Voluntary Disclosure Program to report unreported foreign income and undisclosed foreign bank accounts would be best served by a tax attorney who was not involved in the preparation of the originally filed false tax returns. This is because the tax attorney does not have a conflict of interest and can present your case in the most favorable manner. This is especially important if you are looking to apply in the new Streamlined Procedures announced by IRS. The best way to explain this is by example – if a great defense is that you relied on your tax preparer to tell you whether you had to report your foreign accounts and foreign income, do you think your tax preparer will put himself under the bus to save you from the IRS – chances are not. A tax attorney who had no involvement in the preparation of your returns can make these arguments thus truly serving your best interests.

PLUG: The Law Offices Of Jeffrey B. Kahn will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the KahnTaxLaw Radio Show when you call to make an appointment. Call our office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Well we are reaching the end of our show.

You can reach out to me on Twitter at kahntaxlaw. You can also send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com. That’s k-a-h-n tax law.com.

Have a great day everyone!