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My OVDI Progress

June 25, 2012 441 comments

This is a longtime overdue post. In this post I will update my OVDI progress.

Disclaimer: This is my own experience and this SHOULD NOT be taken as legal advice.

Oct-2012: I noted that links are updated for OVDI 2012. Find them here: http://www.irs.gov/uac/2012-Offshore-Voluntary-Disclosure-Program

Application Progress

02/15/2012: I decided to go with Attorney1. He was convincing and told me exactly what he will do, how long will it take and what are my chances on lower penalty are. His suggestions matched with my online readings and research. Though his charge seems a bit higher, but unlike others, with him I knew the cost upfront. Plus he was going to do all paperwork for me and I am just suppose to sign and pay any penalties/back taxes.

02/25/2012: So far my attorney got pre-clearance for OVDI from IRS i.e. now he can go ahead and submit the OVDI Letter . What is pre-clearance? Read OVDI FAQ #23. What is OVDI Letter? Read OVDI FAQ #24.

03/16/2012: Got an update from the attorney that my case is preliminary accepted for OVDI. So now he will do tax amendments and submit the OVDI package that will mainly consist of stuff mentioned in OVDI FAQ #25 i.e. previous year original and amended tax returns for year 2003 to 2010, bank statements and delinquent FBAR’s for the year I didn’t report.

05/15/2012: Attorney sent me the prepared delinquent FBARs, amended tax returns (Form 1040X) for each year I forgot to report my NRE interest and noted the amounts I owed to IRS. I signed those forms and also sent separate checks for each tax-year I owed to IRS.

05/30/2012: Sent a completed Form 872 (Consent to Extend the Time to Assess Tax) and document “Consent to Extent the time to Assess Civil Penalties for FBAR Violations

06/2012: Got notification from attorney’s office that my OVDI documents package is submitted to the IRS. To my knowledge the package consisted of:

  • Cover letter
  • Copy of pre-clearance received earlier
  • Copy of Amended tax returns 1040X
  • Copy of foreign bank account(s) statements
  • Original delinquent FBARs
  • Consent documents mentioned above (Form 872 and Extend FBAR Statue)
  • Statement of Highest aggregated foreign accounts balance
  • Power of Attorney to allow the attorney represent me

04/2013: Attorney sent a status inquiry to IRS to find out what’s happening with my case.

06/2013: IRS replied saying no status update. Just need to wait 45 days before making another inquiry.

07/2013: I think an officer is assigned to my case as my attorney got query asking for some more details. I am not sure what they have asked for though.

07/2013: The query was asking some clarifications on my account balances and transactions. Attorney replied to the query along with new POA and Form-872.

09/2013: Received 3-copies of Form-906 and penalty calculation sheet 4549-A. The calculation sheet showed the 20% penalty on the taxes I didn’t pay (i.e. taxes on foreign account interest income) and 12.5% Offshore Penalty. It gave time of 14 days to reply with signed copies 906 and the checks for the amount mentioned on 4549-A. I was fine with the penalty amount and so I signed the forms and sent it to my attorney office. Attorney sent those to the assigned agent with a cover letter.

Check this: What should I do once I receive IRS 906 forms?

Note: If you think the penalty is too much and if you wish, you have an option to opt-out of OVDP. In this case don’t sign the 906s but then you will have to go through the regular tax audit process. Check this: Opt-Out Guide

12/2013: Received the final case closed letter from IRS. Two separate letters. One is signed consent form 872 and another one is signed 906. These were the both I sent earlier and they returned with the agents signature.

01/2014: Attorney prepared the amended State tax returns. Had to pay minor tax. As per the attorney, State tax department will directly send me bills for any penalties and interest.

Current Status: Filed the amended State returns. Waiting for the State department to confirm everything is fine.

Are you looking for a tax attorney for OVDI?

Read my blog post: Finding a tax attorney for OVDI

Resources

Hope this helps. Let me know if you have any questions or share your own experience in comments below.

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Finding a tax attorney for OVDI / FBAR

February 26, 2012 174 comments

Many of my blog readers are asking me for the contact information of the attorney I hired to do my Offshore Voluntary Disclosure and file my missed FBAR. For personal reason I would like to hold on to point that individual firm right now. Instead I will give the list of some of the firms I contacted and some I came across but didn’t contact them.

I will also share how I came to a decision on hiring one of the several and also share some tips that might help you to make decision.

Disclaimer: I would like to say this right here that the information here is from my own research, done online and talking to some tax attorneys. This is my own experience and this SHOULD NOT be taken as legal advice.

I found these by searching on the internet using search terms like “OVDI tax attorneys”, “FBAR tax attorneys”, etc. So you can try different variations may be your city or statewise.

List of some of the law firms I contacted or intended to contact

This order in the list is irrelevant and I have hired one of them.

Whom to call?

As you see above I have listed about a dozen of tax law firms and you will also find tons of other different ones. But whom should you call? There are few things I kept in mind before calling someone.

  • Tax Law Firm: I made sure they are tax law firm and not a CPA firm who just do tax filing and other regular tax related stuff. Talk only to a tax attorney for OVDI related stuff and not to a CPA.
  • Practice area: I looked on their website what are their major practice areas. Do they have information where they talk about FBAR, OVDI and other related stuff? Many of them have that in their blog or news area or some in their client success stories. That way I knew they have some idea and most likely experience in dealing with such cases.
  • Location: I wasn’t specific about where the firm is located. I knew most of the stuff can be done via email/phone/mail. So I called firms everywhere in US from east-coast to west-coast.  Even if you only want to hire local attorney, don’t worry, just call the others to get good feeling about your case. I even noted down some contacts in Canada, but I didn’t contact them.
  • Free initial consultation: Most of the firms will have free initial phone consultation. Make use of it. Some might be available right away while for others you will have to make an appointment. If the receptionist answers your call tell you are looking for someone to consult about FBAR and OVDI. You don’t have to give your full name. One of the attorney even told me before I say anything that I don’t have to give my name and everything we talk would be confidential.

Before you call?

Before you start making calls keep the following details handy:

  • Number of foreign financial accounts you have
  • When were they opened
  • The maximum balance at any point of time during each year and year end balance in each accounts and the total balance of all account for each year. You can use the treasury department exchange rates to determine the $ equivalent.
  • If you haven’t reported the interest in those accounts in your tax returns then details of interest earned in those accounts for each year
  • Whether joint accounts or if anyone else has any authority to deposit or withdraw from those accounts

What to ask?

When I talked to an attorney during free initial consultation there were few things I talked to almost everyone. Here are few points

  • Discuss the situation: For me there were two things as I mentioned earlier in my other post. (a) I did not report interest in my foreign accounts and (b) I didn’t file FBAR for the years when the total of my foreign accounts exceeded $10,000. Once I tell that, attorney starts asking more details and that’s when you will need information I suggested to collect in above section.
  • The Process: Upon collecting your information, attorney will suggest what he/she thinks is best in your case. Ask them if they don’t talk in detail what the process would be like. Some of whom I talked wouldn’t tell me clearly what they will do. They just say they need to see the documents i.e. tax returns, bank statements, etc. before giving more details. Most of them charge for that but one of them invited me to his office with my documents and told it would be free.
  • Charges & Penalty:  Ask them how bad is your situation. How good are chances of you getting cleared from criminal charges? What can be the maximum penalty and how good are chances of getting penalty waived or reduced. What would be his/her strategy or reasoning to waive or reduce the penalty.
  • Time:  Ask them how long will the entire process take.
  • Price: This is where you might get confused. Ask them what they would charge for the entire process. For those charging hourly, ask them what would be the approximate time. Most will say based on the complexity, after seeing the documents, etc. For those who charge flat amount, ask what and all will they do and what you will have to do.
  • Note everything: Make a note of what each one says. You will need it to compare and filter out the firm(s). Also you will need this to confirm again what they said earlier before finalizing and paying them.
  • Ending the call: I mainly told, I will give a call back if I decide to go ahead with their firm. Some might scare you, saying you need to act fast, if IRS catches you before you do anything you will be in trouble,etc. Don’t worry about it. Some of them will transfer you to the receptionist prompting you to make a paid-appointment.

How do I know which one is best for me?

    Obviously it will depend on your case and what the attorney suggests you in your case. But here are some factors that helped me make a decision:
  • Whose process and guidance was more convincing: Before I started calling the attorneys I read many articles, blogs and forums about FBAR and OVDI process and other related stuff. That helped me understand what the attorney was talking about and I compared it against my findings. This way I was able to filter out 3-4 attorneys out of dozens I talked to. These 3-4 said more or less the same while rest were talking in circles. Some said no need to go for OVDI, just amend taxes and file delinquent FBARs. I wanted to do this right and so crossed them out right away. Everyone had different opinions on penalty varying from 12.5% up to 50%.
  • Price: Obviously this is going to be a big decision making factor. I was a bit confused on whether to go with a flat-rate or hourly rate. With hourly rate, which was minimum $400/hr, they have different options. Some will tell you what you need to do and then you do most of the paperwork i.e. amending your taxes, filling the FBAR forms, etc. That way you don’t get charged for that time or they can do for you but will charge you. Some charge you for minimum hours which they call as “Retainer Fees”. I like the idea of flat charge as I didn’t want to do anything other than signing. Plus, I didn’t like the uncertainty of how many hours it might take. But if you feel like doing some stuff yourself and have really simple case, you can try hourly to get basic guidance.

Do I really need an attorney? Can’t I do all this myself?

Yes, you can. If you are confident enough and completely understand the process, you can do yourself. I read on some forums people doing it themselves. Also in simple cases where say the penalty would be less than the attorney fees, it makes sense doing it yourself.

You might ask, do I really need to go for OVDI?

Tax attorney is the one who can answer this for you. That’s when my point in red above comes into picture. But what I have read around is, if you have reported the interest earned in your foreign accounts on your income tax i.e. Schedule B and just missed filing FBAR, then you can simply go ahead and file the missed FBARs and you should be in a better position. But again a tax attorney is the best to answer this based on your particular situation.

Conclusion

Sorry, I didn’t explicitly share the information of my attorney, but call yourself some of the firms I listed above to find out where you stand.

Hope this helps. Let me know if any questions or even share your experience or finding in the comments below.

Streamlined Filing Compliance Procedures expanded for Permanent Residents

June 20, 2014 1 comment

You might have read about OVDI or OVDP process but IRS introduced this new process called: Streamlined Filing Compliance Procedures

This was kind of introduced last year but was for US citizens residing abroad. This new process now includes permanent residents i.e. Green card holders as well.

Here are the quick links for your reference.

Streamlined Filing Compliance Procedures

U.S. Taxpayers Residing Outside the United States

If you are already under OVDI/OVDP program check these FAQs: Transition Rules

I couldn’t find much time to read all through and do much analysis. I will update my thoughts as I understand it better but feel free to post your questions and comments.

Hope this helps.

Tax Regulations for Non-Immigrants and NRIs in US

July 24, 2012 6 comments

1040col2

Tax regulations is one of the most confused and complex topic when you are in US on non-immigrant visa (H1/F1/L1, etc.) or you are permanent resident (Greencard holder) or US Citizen.

I found this nice information in form of slides on slideshare.net by  Sanket Shah of NSGlobal. It is really nice information and worth going through once to brush up your knowledge on tax basics and implications. It explains several scenarios with simple examples that’s easy to understand. It has touched almost every basic points including Gift / Estate tax, FBAR / OVDI, FACTA(8938), etc.

Link to Slideshow

Also check this slideshow: Do you Know

Hope this helps.

July 10, 2012 2 comments

To OVDI or Not OVDI?

U.S. Persons Abroad - Members of a Unique Tax, Form and Penalty Club

On January 9, 2012 the IRS reopened the Offshore Voluntary Disclosure Program “OVDI”. People should enter OVDI only after an objective discussion with a lawyer who is experienced in U.S. tax compliance issues. Contrary to what at least one tax preparation firm suggests, OVDI is one of a number of compliance options. Although OVDI is available to anyone who wants to enter, it presumes criminality. Minnows should think long and hard before entering OVDI and should have an objective reason based on your specific facts  for entering it. For many people, entering OVDI is an emotional reaction. You need to make a calm, rational decision. Those entering OVDI  should be able to answer in one short sentence the question:

How did your analysis result in your decision  to enter OVDI?”

In any case, this is for you to decide with the help of your…

View original post 1,422 more words

Categories: Uncategorized

Lots of Strawberries

July 2, 2012 Leave a comment

strawberries

Finally the FBAR filing season is over and I wanted to post something different. Thought enough of taxes, FBAR, OVDI, passport, etc. So this is a random post…Strawberry season.

I bought these strawberries at my local grocery store for $3.25/4Lbs. It is really good in taste, sweet but not too much. And since I don’t want it to get spoiled I will have to eat it all day.

Categories: Food Tags: ,
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