Do I have to Talk to an IRS Agent for Failing to File Form 3520?

For many U.S. taxpayers who are out of compliance for failing to report foreign accounts, assets, investments, and/or income, at some point, they realize that they want to get back into compliance and into the good graces of the IRS. If the Taxpayer has not yet been penalized and/or under examination, their best option is usually to submit to an offshore tax amnesty program or alternative type of international tax submission. Whether you’re five years old, 15 years old, or 50 years old — nobody wants to deal with the in-person consequences of their actions if they can avoid it — dogs included. The question then becomes when taxpayers want to get into compliance for failing to file various international information reporting forms, must they submit to an in-person interview to complete the process? Typically, the answer is no — under most circumstances, taxpayers are not required to have an in-person interview. But, sometimes if a taxpayer is under audit or examination or other type of potential situation (or subject to an IRS Special Agent Investigation), they may become subject to an in-person interview with an IRS agent or officer. Let’s look at some basic situations involving failure to file IRS International Information Reporting Forms 3520/3520-A, 5471, 8938, 8865, etc.

VDP (Voluntary Disclosure Program)

When the taxpayer submits to the new version of the IRS Voluntary Disclosure Program, they are required to have an interview with the agent for the agent to submit the case to the supervisor for closure — for the 906 closing letter to be issued. This was typically not required in prior versions of the voluntary or offshore voluntary disclosure programs, but it is currently required under the new version of the program. With that said, taxpayers are usually not required to submit to an in-person interview. Instead, the interview can be handled by telephone. If the taxpayer is being represented by an attorney, then the attorney can be on the call as well (and should be on the call). Therefore, for taxpayers who are considering the voluntary disclosure program but do not want to meet in person with the agent, typically they can circumvent an in-person interview by way of a telephone conference.

Streamlined and Delinquency Procedures

When it comes to the Streamlined Filing Compliance Procedures or the Delinquency Procedures, taxpayers are not typically required to submit to an in-person interview either. In other words, by submitting to one of these types of non-willful disclosure programs, the taxpayer is not required as part of the submission process to meet with the agent in person for an interview. If the taxpayer ends up being audited and finds himself under examination, then depending on the nature and the extent/circumstances of the examination, the taxpayer may have to submit to an in-person interview — but these days, oftentimes it is done by telephone or video conferencing.

Examinations, Audits, and the IRS Special Agents

Under most circumstances, when a taxpayer is under audit or examination for international information reporting forms, they are not required to meet with the agent in person. Most audits are handled by correspondence, telephone, and video conferencing. Sometimes, if the taxpayer is under a more intensive audit and the IRS believes that there may be criminal issues at play, then the IRS Special Agents may get involved. And when the IRS special agents get involved, then the taxpayer may receive an unwanted visit from the IRS Special Agents and the Special Agents will want to speak with the taxpayer in person.

It is very important to note, that if a taxpayer is ever unexpectedly by IRS Special Agents, they should always refrain from communicating with the agents other than to be polite, ask for their business card, and let them know that their attorney will communicate with them to schedule an interview. Generally, when the special agents are involved the meeting between you the special agents, and your attorney — this will be an in-person interview.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties.

**Need Help Finding an Experienced Offshore Tax Attorney?**

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting.

This resource may help taxpayers seeking to hire offshore tax counsel: How to Hire an Offshore Disclosure Lawyer.

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure.

Contact our firm today for assistance.