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Invoking the Fifth Amendment in Audits With Offshore Issues: Required Records Under The Bank Secrecy Act, Greenfield, and Continuation Penalties by Frank Agostino, Esq. and Lawrence A. Sannicandro, Esq. – The Internal Revenue Service (“IRS”) continues to deliver on its promise to audit taxpayers who made quiet disclosures, who imprudently entered into the Streamlined Filing Compliance Procedures (“Streamlined Program”), or who never disclosed offshore accounts. These audits, which are typically based on third-party information received under the Foreign Account Tax Compliance Act (“FATCA”), tax information exchange agreements, or as a result of the Swiss Bank Program, require a special strategy because the third-party information that triggered the audit (whether right or wrong) usually supports the conclusion that the taxpayer violated U.S. law. Practitioners handling audits with undisclosed offshore accounts must be especially proactive in asserting all applicable privileges, including the Fifth Amendment privilege against self-incrimination.
This article explains that tax professionals handling offshore audits should assert all applicable privileges, including the Fifth Amendment privilege against self- incrimination, when submitting to an IRS interview or responding to a summons or an information document request (“IDR”).
Then, this article discusses three common situations in which a taxpayer may rightly invoke his or her Fifth Amendment privilege against self-incrimination during an audit with offshore issues.
- The first situation is in response to an IDR or a summons by the IRS seeking information with respect to foreign bank accounts. In this regard, the Court of Appeals for the Second Circuit’s recent decision in United States v. Greenfield breathes new life into Fifth Amendment objections to some, if not many, of the documents the IRS routinely requests in an offshore audit.
- The second situation is during IRS interviews, especially where the revenue agent possesses third-party information suggesting a violation of the internal revenue laws but refuses to disclose the specifics of that information.
- The third situation is in response to revenue agents’ requests for taxpayers to file past due international information returns to avoid continuation penalties. On this point, a recent Order by the United States Tax Court (“Tax Court”) in Youssefzadeh v. Commissioner supports that a line-by-line assertion of the Fifth Amendment privilege on delinquent foreign information returns is a viable alternative to filing a potentially inculpatory information return.
GREAT ARTICLE!! FOR THE FULL ARTICLE SEE http://files.constantcontact.com/f7d16a55201/ab897fa2-b252-47cc-ba92-138337eb9269.pdf
AGOSTINO & ASSOCIATES, with a national practice based in Hackensack, NJ, specializes in tax and tax controversies (civil and criminal), offers in compromise, voluntary disclosures, tax lien discharges, innocent spouse determinations, forfeitures, estate planning and probate, contract and contract litigation. A firm comprised truly great, caring people who want the best for their clients !
For further information, contact Frank Agostino or Lawrence A. Sannicandro, Esq.- directly at (201) 488-5400 or visit http://www.agostinolaw.com