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 choppy waters. If you have interests outside of the United States or are considering or living the life of an expatriate, you will 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 their tax attorney's extensive experience in local, national, regional, or international tax treaties and issues 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 structure your holdings and associated accounting processes. This trusted advisor should also be able to accelerate or decelerate income or losses between tax years to reduce the impact of short and long-term taxation.
In short, you work hard to generate the money you earn. As a U.S. taxpayer, you have the right 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 for any tax attorney going forward. Gone are the days of localized investment and seeking a monopoly of local markets. 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 specific tax identification (Social Security Number or SSN, Taxpayer Identification Number or TIN), account numbers, balances, and transactional data.
The failure to accurately disclose and report international accounts, assets, and transactions 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 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 to the IRS workforce do not affect the ability of the agency's sophisticated artificial intelligence applications and state-of-the-art data processing systems to process the massive streams of incoming international data, tie it to individual taxpayers or entities, and 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 worldwide. How income is realized and taxed is much different offshore than in the United States. Therefore, the reporting provided by foreign investments is much less detailed than the information required to complete IRS and state tax returns reflecting activities in foreign mutual funds, retirement systems, and pensions, or Passive Foreign Investment Companies or PFICs.
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 essential 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 your local city and state laws. Your tax attorney should provide insight into how your trust and estate plans are constructed, as well as specific details within corporate documents such as bylaws, operating agreements, and shareholders' agreements, as well as business succession planning and 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 and 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 U.S. taxpayer to communicate directly with the IRS.
Ask your tax attorney about the protections of the attorney-client privilege. This important communications protection can help shield and protect your information from the IRS while allowing you to have the conversations you need to have with your tax attorney to manage your unique portfolio and make sound, informed decisions.
Why must a U.S. taxpayer 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 structure your holdings, transactions, business, and investments, and fulfill reporting requirements to ensure you are able to keep more of the money you have worked so hard to generate.
