Brager Tax Law Group Finally Receives IRS Documents under FOIA for Foreign Retirement Account

LOS ANGELES, April 04, 2016 -- Last week after nearly a year of waiting, the Brager Tax Law Group received IRS documents after filing a Freedom of Information Act (FOIA) Request in early April 2015.

The request stemmed from a conversation that a Brager Tax Law attorney had with the IRS’ Offshore Voluntary Disclosure Program (OVDP) hotline to ask about the treatment of a Superannuation account. Superannuation accounts are the Australian version of the U.S. tax-favored retirement plans. These accounts, sometimes referred to as Supers, can be very problematic for immigrants from Australia to the U.S., because they may or may not be subject to taxation in the U.S. The ownership of a Super may trigger the requirement to file an FBAR (Foreign Bank Account Report, FinCEN Form 114, formerly TDF 90-22.1) and/or Form 8938, Form 3520 or Form 3520-A.

“The proper treatment of a Super under U.S. tax law is confusing, because there are different types of Supers,” according to Dennis Brager, founder of the Brager Tax Law Group, “and, depending upon the facts and circumstances, the U.S. tax treatment may differ.”

Brager describes the conversation with the IRS. “We were told that no Form 3520 was required. The person we spoke to was obviously reading from a script and, of course, we asked for a copy. Just as predictably, we were told that it was an ‘internal document,’ and, therefore, we couldn’t get it.” Brager filed the FOIA Request and waited…for 11 months.

The FOIA request revealed a series of emails between various technical specialists in the IRS’ Offshore Compliance Group, IPN OVDP Coordinator. “These emails indicate that at least through early 2015 some IRS personnel, including those who were presumably in the best position to understand the intricacies of foreign retirement plans still had many questions,” says Brager. “Because the emails are redacted, it is difficult to tell exactly who was in the dark. The emails may support an argument that there was reasonable cause for any failure to report income, file FBARs or file Forms 8938 related to foreign retirement plans including Australian Superannuation accounts.”

Brager continues, “As late as the end of November 2014, whether an Australian Superannuation account was a foreign financial account reportable on an FBAR was still a topic of discussion! The email is also revealing in that it seems to reflect a mindset to attempt the maximization of the amount of the OVDP penalty.”

The documents obtained by the Brager Tax Law Group from the IRS under the FOIA are on the Brager Tax Law Group website at www.BragerTaxLaw.com. This was the second FOIA request filed by Brager within 13 months. “We will continue to file FOIA requests when the IRS can’t answer questions to our satisfaction,” Brager concludes. “But it’s unfortunate that the IRS needs 11 months to produce these documents that are critical for taxpayers and tax preparers to understand and comply with our complex tax system.”

Based in Los Angeles with a worldwide client base, the Brager Tax Law Group is a tax litigation and tax controversy law firm, which represents clients with tax disputes with the IRS in all 50 states, the California Franchise Tax Board (FTB), the State Board of Equalization (SBE) and the Employment Development Department (EDD). All of the Brager Tax Law Group’s tax lawyers are former trial attorneys with the IRS.

Contact:
Jovana Smolovic
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