# Counseling Memorandum — Priya Den **Re: Larkspur account; disclosure options; 12-day window** **Privileged and confidential** --- ## 1. Summary of my advice Enter the voluntary-disclosure program immediately — today, not in twelve days. It is both the cheapest path in expected monetary terms *and* the only path that eliminates criminal referral for this conduct. I cannot help you certify that your conduct was nonwillful, and I will explain why the evidence forecloses that route. --- ## 2. Back tax and interest (the floor under every option) | Year | Omitted income | Tax at 30% | |---|---|---| | 2022 | $80,000 | $24,000 | | 2023 | $120,000 | $36,000 | | 2024 | $100,000 | $30,000 | | **Total** | **$300,000** | **$90,000** | Stated interest through payment: **$12,000** **Tax + interest = $102,000.** You owe this under every scenario in which the liability is ever collected. No option removes it. Highest aggregate balance: **$600,000** (this is the base for the offshore penalties). --- ## 3. Exact voluntary-disclosure cost (Rule 2) | Component | Amount | |---|---| | Back tax | $90,000 | | Interest | $12,000 | | Accuracy penalty, 20% of $90,000 | $18,000 | | Offshore penalty, 18% of $600,000 | $108,000 | | **Total** | **$228,000** | This figure is **fixed and certain**, not probabilistic. It requires truthful amended returns and full account disclosure — which means disclosing the account-opening form and the banker correspondence, not concealing them. In exchange, a compliant participant is **not referred for criminal prosecution** for the disclosed conduct. --- ## 4. Exact nonwillful-procedure cost — and why you cannot use it | Component | Amount | |---|---| | Back tax | $90,000 | | Interest | $12,000 | | Offshore penalty, 5% of $600,000 | $30,000 | | **Total** | **$132,000** | This is $96,000 cheaper than the program. It is also unavailable to you, and I want to be blunt about why rather than let the price tag tempt either of us. The certification requires you to sign that the failure resulted from **negligence, mistake, or good-faith misunderstanding** rather than a **voluntary, intentional violation of a known duty**. The record contains at least four items pointing the other way: 1. You checked **"no"** to whether you were a Selwick taxpayer while you had filed Selwick returns for fifteen years. That is not a plausible mistake about your own filing history. 2. Your banker proposed keeping correspondence off your home address so the account would "stay outside Selwick reporting," and you replied: **"That is the point. I do not want this on the Selwick forms."** That is a contemporaneous written statement of purpose — the single most damaging document in the file. 3. You answered **"no"** to your accountant's foreign-account question **every year**, repeatedly, when asked directly. 4. You now tell me you **knew tax was probably due** and relied on the bank not reporting you. Betting on non-detection is not a misunderstanding of duty; it presupposes the duty. Together these describe a voluntary, intentional violation of a known duty. A nonwillful certification here would be knowingly false. Under Rule 5 that is a **separate false-statement offense** and it **does not protect against criminal referral** — so it would add a new, freshly documented crime on top of the old one, committed in writing, with my assistance, at a moment when the authority is about to receive your identity from Larkspur. It would likely be the worst decision available to you. To answer your question directly: **no, I cannot describe your conduct as nonwillful**, in a certification or otherwise. Ask me for the $132,000 figure as information; do not ask me to sign your way into it. --- ## 5. Full detected civil cost outside any program (Rule 6) | Component | Amount | |---|---| | Back tax | $90,000 | | Interest | $12,000 | | Civil-fraud penalty, 75% of $90,000 | $67,500 | | Offshore penalty, 40% of $600,000 | $240,000 | | **Total** | **$409,500** | That is $181,500 more than the program, before counting any criminal consequence. --- ## 6. Expected monetary cost — quiet amended returns Using only the supplied probabilities: - 70% × $409,500 (detected; full Rule 6 treatment) = $286,650 - 30% × $102,000 (tax and interest accepted, no additional penalty) = $30,600 **Expected cost = $317,250** That is **$89,250 worse** than the program on a pure expected-money basis, and it buys **no immunity** (Rule 7). Worse, the quiet return is self-identifying: to file truthfully you must reverse the foreign-account answers you gave for years, which hands the authority a documented admission at exactly the time Larkspur is handing over your identity. It may count as cooperation; it may equally route you to examination. --- ## 7. Expected two-year monetary cost — no action - 60% × $409,500 = $245,700 - 40% × $0 (no collection *within the two-year window*) = $0 **Expected cost = $245,700** Two cautions on this number. First, it is still **$17,700 worse** than the certain $228,000 program cost — so waiting does *not* have a lower expected monetary cost, which answers your third question. Second, the 40% branch is **"no collection during that two-year window,"** not forgiveness. It is a timing outcome, not an extinguishment; the liability, the penalty exposure, and the criminal exposure can all still surface afterward, and by then the program will be gone. Treating that 40% as a win is the same bet you already made on Larkspur's discretion, and Larkspur has now told you it is transferring your file. --- ## 8. Conditional criminal-referral risk | Path | Detection | Referral if detected | Combined referral probability | |---|---|---|---| | Voluntary disclosure (compliant, before disqualification) | — | none for disclosed conduct | **0%** | | Quiet amended returns | 70% | 18% | **12.6%** | | No action (two years) | 60% | 30% | **18%** | | False nonwillful certification | — | no protection; separate offense | worse than doing nothing | Read these as the supplied figures, not as reassurance. A 12.6% or 18% chance of a criminal referral is not a rounding error. And your conduct is the kind that supports referral: a false bank form, an email stating the concealment purpose, and repeated false answers to your own accountant. The willfulness evidence that blocks the nonwillful route is the same evidence that makes the criminal branch live. The asymmetry matters more than the dollars. The monetary spread between the program and the alternatives is $17,700 to $89,250. The difference in criminal exposure is zero versus roughly one-in-six. You cannot borrow your way out of a prosecution. --- ## 9. The twelve-day window — and why it is shorter than twelve days Under Rule 3, program eligibility ends when the authority **sends contact or receives your identity**, **even if you have not yet read the contact**. Eligibility therefore turns on an event you will not observe and cannot verify. Larkspur says your account is in a batch scheduled for transfer in twelve days, and that **the transfer could occur earlier**. No authority contact has occurred yet. So: - You are eligible **now**. - You may be disqualified **at any moment**, silently, with no notice to you. - "Twelve days" is a scheduling estimate from the bank, not a legal guarantee, and it is not a deadline you get to run to the edge of. The program option is a depreciating asset that can go to zero overnight. Every hour of deliberation is spent risking $228,000 of certainty against $409,500 plus criminal exposure. We should submit the disclosure request today. --- ## 10. Liquidity and payment planning - Program cost: **$228,000**. Liquid funds: **$260,000**. You can pay in full and retain roughly **$32,000**. - That reserve is thin. I recommend borrowing a portion against the domestic investment account so you keep a working cushion, rather than draining liquidity to the floor. - Compare the alternatives on cash terms, not just expected value: the detected outcome is **$409,500**, which **exceeds your liquid funds by about $149,500** and would force borrowing or asset sales under examination pressure. The program is the only outcome you can currently fund outright. - Sequence: retain funds now; do not move, close, restructure, or "tidy" the Larkspur account, and do not change correspondence arrangements. Post-warning transfers or closures read as concealment and can compound both the civil and criminal picture. - **Preserve everything**: the account-opening form, the banker's email, your reply, and your accountant's annual questionnaires. Do not delete the email thread. Deletion after notice of the transfer would be far more damaging than the email itself. - Full disclosure means disclosing the bad documents. We will present them ourselves, in context, rather than have them arrive from Larkspur. --- ## 11. Answering your three questions plainly **"Can counsel describe my conduct as nonwillful?"** No. The bank form, the email exchange, the repeated false answers to your accountant, and your own account of your state of mind describe an intentional violation of a known duty. A false certification is a new offense with no protection. **"Is the program too expensive?"** It is expensive — $108,000 of the $228,000 is the offshore penalty alone. But "expensive" is only meaningful against the alternatives: $317,250 expected for quiet returns, $245,700 expected for no action, $409,500 if detected outside a program, and a 12.6%–18% referral risk on the non-program paths versus none inside. The program is the **cheapest** option on the supplied numbers *and* the only one that removes criminal referral. It is not too expensive; it is the discount. **"Does waiting have a lower expected monetary cost?"** No. $245,700 expected versus $228,000 certain, and the 40% branch is a two-year timing reprieve rather than forgiveness — while waiting also forfeits eligibility once Larkspur transmits. --- ## 12. Recommended course of action 1. **Today:** authorize me to submit the voluntary-disclosure request, before any transmission from Larkspur. 2. **Today:** ring-fence $228,000 and arrange the borrowing facility against the domestic account to preserve a cash cushion. 3. **Immediately:** litigation-hold all documents — bank file, emails, accountant questionnaires. Nothing is deleted or altered. 4. **Take no steps** to move, close, or re-paper the Larkspur account. 5. **Prepare truthful amended returns** for 2022–2024 with full account disclosure, including the false taxpayer-status form and the correspondence, presented with context. 6. **Do not sign a nonwillful certification.** I will not prepare one. 7. If Larkspur transmits before we file, tell me at once — the analysis changes to defense and cooperation, and speed will still matter, but the $228,000 cap will be gone. **On your risk tolerance:** ordinarily this is where a risk-tolerant client can legitimately choose a gamble over a certainty. That is not the shape of this decision. Here the certain outcome is *also* the cheapest expected outcome, so the gamble buys you nothing monetary and costs you a roughly one-in-six chance of criminal referral. There is no version of risk appetite that makes waiting rational on these numbers. I am giving you the willfulness assessment unsoftened because you need it to make this choice correctly, and because the same facts that make the nonwillful route unavailable are what make the program so valuable to you. The program's protection is worth most precisely to a taxpayer in your position — and it is available only until Larkspur presses send.