Are you searching for information on how to choose the right tax attorney? Are you a U.S. taxpayer who has a challenge with the IRS or a state tax agency? Are you facing an IRS or state tax audit? Are you an American expatriate or considering moving outside of the United States? Do you own foreign assets, investments or businesses?
The tax picture for 2025 could not have higher stakes as our elected officials work to manage the sunsetting provisions of the Tax Cuts and Jobs Act (TCJA), substantial cuts to the federal workforce and budget cuts, international trade issues and tariffs, and the impact all of these issues have had upon financial markets and investments here in the U.S. and around the world.
These are challenging times, and those with substantial domestic U.S. and international interests are heading into some choppy waters. If you have interests outside of the United States, or are considering or living the life of an expatriate you are going to need an experienced, skilled tax attorney in your closest circle of advisors.
One of the first qualities to look for in a tax attorney is experience. There is no substitute for genuine experience, especially when dealing with IRS revenue officers or state tax agents. Those with international investments and interests depend on extensive experience in local, national, regional, or international tax treaties and issues in order to structure their business entities and investment portfolios to control not only where they experience a capital gain or loss, but when. An experienced tax attorney can help you to not only structure your holdings and supporting accounting structures, they should be able to accelerate or decelerate income or losses between tax years to to reduce the impact of short and long-term taxation.
In short, you work hard to make the money you earn. You have the right as a U.S. taxpayer to take every legal step to structure your affairs and claim every available exemption and deduction so that you may keep more of that hard earned income.
International tax experience is a “must-have” skill going forward for any tax attorney. Gone are the days of localized investment and seeking a monopoly of local markets. The combination of greater access to international markets, investments and businesses combined with developments in cryptocurrency and digital assets has opened new horizons for investment and substantial gains (and losses).
However, the world has become a more “transparent” place from the perspective of the IRS and other international or sovereign tax authorities. Today, more than 110 nations have FATCA agreements with the United States. The Foreign Financial Institutions and sovereign tax agencies of these nations around the world provide direct electronic reporting to the IRS on all accounts, assets and transactions of U.S. citizens with whom they conduct business or have accounts. This information includes not only specific tax identification (Social Security Number or SSN, Taxpayer Identification Number or TIN), but account numbers, balances and transactional data.
The failure to accurately disclose and report international accounts, assets and transactions to FinCEN on Form 114 (more commonly referred to as an FBAR) and the IRS exposes U.S. taxpayers to substantial, even draconian financial penalties, fines and interests, as well as the genuine risk of criminal tax evasion exposure. Offshore income and assets have been a central priority and focus of the IRS for more than two years. They started with large entities and those with substantial offshore income. They are beginning to get to the larger pool of “small to mid-size” taxpayers.
The recent cuts at the IRS do not affect the ability of the agency’s sophisticated artificial intelligence applications and state-of-the-art data processing systems to work through the massive streams of incoming international data, tie it to individual taxpayers or entities, and then compare it to the information provided by these taxpayers on associated returns. Any inconsistencies generate an immediate red flag, investigation and/or audit.
In addition, the GAAP accounting principles of the United States are much different than the accounting standards in the EU, far east and around the world. The manner with which income is realized and taxed is much different offshore than it is here in the United States. Therefore, the reporting provided by foreign investments is much less detailed than the accounting information required to complete IRS and state tax returns reflecting activities in foreign mutual funds, retirement systems and pensions, or Passive Foreign Investment Company or PFIC.
Many U.S. expatriates and those with international investments are surprised by the substantial difference in IRS reporting requirements and the extensive tax accounting required to develop required offshore basis and gain or loss data in order to complete U.S. tax returns.
You don’t have to have international interests to require an experienced tax attorney. Those who own local, interstate or national business interests, from a small “mom and pop” storefront to a large interstate constellation of locations and entities, also need to know how to choose the right tax attorney.
Look for experience in business, tax and accounting, estate planning, due diligence in mergers and acquisitions, business formation and entity selection, and extensive experience in the laws of your local city and state. Your tax attorney should provide insight into how your trust and estate plans are constructed, corporate documents and business succession planning, as well as transactional planning to maximize the balance of Passive Income Generators/Gains (PIGs) and Passive Activity Losses (PALs).
Do you want to keep the largest portion of what you earn and the income you generate through investment and business-related efforts? Do you want to protect all that you have worked so hard to establish and grow over the past several months? Years? Decades?
Why should a U.S. taxpayer or expatriate be that concerned with the IRS, especially in this political climate? The IRS has the ability to levy your bank accounts, seize your assets, file a wage garnishment against your income or assets, place a lien against your home or assets, assess six or seven figure penalties and fines on your offshore investment income, refer criminal charges for tax evasion and generally make life miserable.
An experienced tax attorney can remove all of those issues and concerns from your mind, structure your affairs to minimize the impact of taxation while ensuring compliance with state, federal and international tax agencies. Your tax attorney should also handle all direct communications with the IRS on their behalf. It is not in the best interest of any US taxpayer to communicate directly with the IRS.
Ask your tax attorney, Janathan Allen, about the protections of the attorney client privilege and this important communications protection can help to shield and protect your information from the IRS while allowing you to have the types of conversations you need to have with your tax attorney to manage your unique portfolio and make sound, informed decisions.
Why does a U.S. taxpayer need to know how to choose the right tax attorney? On your own, the deck is heavily stacked against you. This is especially true for those with international investments, business and interests. An experienced tax attorney will provide sound counsel, help you to structure your holdings, transactions, business and investments and fulfill reporting requirements so that you may keep more of the money you have worked so hard to generate.
We invite you to learn more about the integrated tax, legal, accounting and business consulting services of Allen Barron and contact us or call today to schedule a free consultation at 866-631-3470.
