Multiple Representatives and Conflict Waivers, Let the Fun Begin
Foreign corporations, partnerships and trusts can take advantage of the protections of the Offshore Voluntary Disclosure Program. In doing so, we walk through an exercise in Ethics that most second or third year law students study: conflict of interest. If the entity has one single individual as the owner, shareholder or trustee then the analysis is quite simple, one representative is enough. However, this is rarely the case, as there are normally multiple parties with varying interests.
Let’s use a foreign corporation as an example. If the corporation has three shareholders (one majority and two minority), then the corporation will need a representative and each shareholder will also need their own representation. If one firm provides the representatives for each individual and the entity, then there must be conflict of interest waivers signed with procedures invoked to bifurcate the representation. As the saying goes, what is good for the goose is not always good for the gander. Conflicts will inevitably arise and legal counsel should not have to be forced to pander to one party over the others (likely the majority shareholder). Before beginning the OVDP process in these types of situations, take time to perform your due diligence to set the proper ethical structures in place. It will pay dividends in the long run.
About Five Stone Tax Advisers
Five Stone Tax Advisers has years of experience negotiating directly with the IRS to get the best possible outcome for you. Our International Tax Advisory and Compliance unit has a team of tax attorneys, certified public accountants and enrolled agents that form a single sourced point of contact that will provide services for all the legal, compliance and financial reconstruction aspects of offshore account cases.
