Lawyers and accountants are giving conflicting information

[CryptoIsFreedom]

I've booked and called many lawyers and accountants, they are giving conflicting information about the same company, same situations.

Sometimes the difference of advice is like gray/black, sometimes the advice is 180 degrees the opposite it is like white/black.

After many calls and meetings, I'm back to square one. Because of the conflicting advice, I don't know what kind of taxes I'm subject to or if I'm able to do certain actions.

Is there a mental model or general advice on what to do in such situations? I'm thinking that maybe some of these people are playing tooo safe or trying to create extra complications and extra work for themselves? Or some of the people are saying things I want to hear, to get my business? Or some of them have outdated information or don't know the field well enough?

Would one of these frameworks fit? Or is the field more complex: "If you talk to 5 lawyers and each gives you differen advice, go with the riskiest" or "If you talk to 5 lawyers and each gives you different advice, go with the safest"?

 

[CryptoIsFreedom]

And the subject isn't even that complicated. It's about single member foreign owned Delaware LLC, sales taxes, contractors.

 

[NicolasMaduro]

Usually you pay your local tax authorities for a binding answer regarding your situation.

Lets assume you live in Spain, Germany or any european country. You incorporated a company in Delaware because you though you could
save alot of taxes. The truth is that your Delaware LLC is taxed in the country you live in, and you can´t just avoid paying taxes by incorporating in Delaware. You should
have just incorporated in the country you live in.

 

[CryptoIsFreedom]

Usually you pay your local tax authorities for a binding answer regarding your situation.

Lets assume you live in Spain, Germany or any european country. You incorporated a company in Delaware because you though you could
save alot of taxes. The truth is that your Delaware LLC is taxed in the country you live in, and you can´t just avoid paying taxes by incorporating in Delaware. You should
have just incorporated in the country you live in.

The conflict isn't about local taxes. It is about US sales taxes and US contractors. Which these guys are speacializing in.

For local taxes all their responses are the same: "I don't know. Ask you local tax dudes"

 

[pipona]

I've booked and called many lawyers and accountants, they are giving conflicting information about the same company, same situations.

Sometimes the difference of advice is like gray/black, sometimes the advice is 180 degrees the opposite it is like white/black.

After many calls and meetings, I'm back to square one. Because of the conflicting advice, I don't know what kind of taxes I'm subject to or if I'm able to do certain actions.

Is there a mental model or general advice on what to do in such situations? I'm thinking that maybe some of these people are playing tooo safe or trying to create extra complications and extra work for themselves? Or some of the people are saying things I want to hear, to get my business? Or some of them have outdated information or don't know the field well enough?

Would one of these frameworks fit? Or is the field more complex: "If you talk to 5 lawyers and each gives you differen advice, go with the riskiest" or "If you talk to 5 lawyers and each gives you different advice, go with the safest"?

It's very frustrating, isn't it? And I think it's a very good question. What's the best practice? Talk to the most expensive tax lawyer in your jurisdiction, or a big 4 accounting firm? Even they can give conflicting/bad advice.
I would also be very curious about the best way to go about this.

 

[Golden Fleece]

If dealing with U.S. income tax laws, one method is to find lawyers in private practice who began their legal careers working for the IRS and who, while there, amassed extensive auditing and enforcement experience in the legal area where you have questions. Such lawyers compile a great deal of experience while working in the trenches. Moreover, be quite candid about the conflicting advice and inform them that you require a greater degree of certainty.

 

[John Spectre]

The problem that your specific case could have side effect which your lawyers dont have correct experience and knowledge.
That's why they just give you advice without any guarantee.
Its a for sure could create problem for you.
If taxman give you fine, you can't avoid it by saying that some lawyer propose it for you and you will dont pay fine because of it

For some areas(for example crypto) its many years situation where is no clarification and people should do on own risks.

My personal opinion would be not to follow advice of random lawyer who get their $ for consulting and disappeared when problems come.
You would just try to found ready made solution that it proved to work(in different jurusdictions, different setup or even grey/dark area). But following this scheme should be only in case it worked for 100% for your case. Not some theory from anyone without first hand experience.

 

[CryptoIsFreedom]

The problem that your specific case could have side effect which your lawyers dont have correct experience and knowledge.
That's why they just give you advice without any guarantee.
Its a for sure could create problem for you.
If taxman give you fine, you can't avoid it by saying that some lawyer propose it for you and you will dont pay fine because of it

For some areas(for example crypto) its many years situation where is no clarification and people should do on own risks.

My personal opinion would be not to follow advice of random lawyer who get their $ for consulting and disappeared when problems come.
You would just try to found ready made solution that it proved to work(in different jurusdictions, different setup or even grey/dark area). But following this scheme should be only in case it worked for 100% for your case. Not some theory from anyone without first hand experience.

This is a double edged sword.

1. The lawyer that only gives advice can give bad advice because he is not accountable for it. But he can give honest advice because he doesn't profit from it
2. The lawyer that will incorporate the company and maintain it is incentivized to sell his services, so he can give wrong advice to look like a good deal. He shouldn't give illegal advice and setup an illegal structure because he'll be maintaining it. But he does have the incentive to overcomplicate things, so he can charge more to provide services that I don't normally need

 

[CyprusLaw]

This is a double edged sword.

1. The lawyer that only gives advice can give bad advice because he is not accountable for it. But he can give honest advice because he doesn't profit from it
2. The lawyer that will incorporate the company and maintain it is incentivized to sell his services, so he can give wrong advice to look like a good deal. He shouldn't give illegal advice and setup an illegal structure because he'll be maintaining it. But he does have the incentive to overcomplicate things, so he can charge more to provide services that I don't normally need

My suggestion would be to request for the lawywr to issue a formal legal opinion, this makes him liable to you for negligence if the advice is bad, and also gives you comfort that you have a detailed formal opinion to rely on

 

[GPT]

Going offshore is a philosophy, not a science.

Tax authorities want you to believe that what they claim is black and white. In reality it is not. Especially not when it is cross border. This is where different lawyers and accountants give different information as it's all based on opinions and experience. Add to that most lawyers and accountants not having the international / cross border knowledge. As a last factor it concerns your personal tax situation. Did you share everything with them on where you stand and where you want to move towards?

How to proceed from here?
Be clear on your goal. What do you want to accomplish? Zero tax? Launching a new product in a new jurisdiction? How much profit is involved -> in some occasions it is not cheaper to go offshore. Liability? Start with the end in mind and then bring it back to defined blocks such as personal / national / international etc. From there on you will have a clear defined end goal with questions. One of the most common things I have experienced to come across is prospective clients not having a clear goal in mind. "I want to go offshore" is not a goal.

 

[Don]

And the subject isn't even that complicated. It's about single member foreign owned Delaware LLC, sales taxes, contractors.

Is it owned by a person or another legal entity? Note that as a subsidiary the foreign parent is exposed to US taxation.
In some cases, it might make sense to test the market with a foreign entity at first.

Don’t set up an LLC (Limited Liability Company) unless you are fully informed about the tax consequences (set up a corporation instead). On the other hand
Don’t assume you are automatically “safe” from U.S. jurisdiction and taxes if you sell from outside the US into the U.S. without the physical presence in the U.S. Look into regulations related to establishing nexus.

I would say it's best if you find someone from your country who has experience in entering the US market to advise you.

US market is attractive, but it's hard to get away without investing heavily in legal & international tax advisors and local salespeople, which demands ample funds, especially in the beginning.

You need to think of the state level, similar to the EU, the US has different regulations in each state.
That's why I would not really expect to hear anything other from the international tax advisors than: "I don't know. Ask your local tax dudes."
I highly doubt there are advisors capable of advising on all the US jurisdictions.

US Legal Context:
• “Supply Chain” relationships are mainly governed by state laws
• Contract law = state laws
• Corporate law = state laws
• Product liability laws = federal and state laws
• Intellectual property laws = federal and state laws
• Immigration laws = federal laws
• Tax laws = federal, state, and local laws => Paying local sales tax + plus any county or district taxes that may apply => need to analyze if you have established a nexus in this state

Contract laws - US is a different world compared to EU.
In the US = a promise to pay damages if you walk away
In the EU = a promise to perform

Watch out for “indemnity/defense provisions” (product liability).
The US is a market where you can go to a lawyer on a contingency fee basis meaning if the case is not won you will not need to pay lawyers, so people tend to use that option more often. Also, try to protect yourself from ADA Law Suits, etc.
In general, never sell your products without solid terms and conditions in writing.


Note that I am not a US lawyer or advisor. This is just my limited knowledge on the subject.

 

[CryptoIsFreedom]

My suggestion would be to request for the lawywr to issue a formal legal opinion, this makes him liable to you for negligence if the advice is bad, and also gives you comfort that you have a detailed formal opinion to rely on

Thanks, solid advice here. What is the equivalent for accountants?

 

[CryptoIsFreedom]

Is it owned by a person or another legal entity? Note that as a subsidiary the foreign parent is exposed to US taxation.
In some cases, it might make sense to test the market with a foreign entity at first.

Person

Don’t set up an LLC (Limited Liability Company) unless you are fully informed about the tax consequences (set up a corporation instead). On the other hand
Don’t assume you are automatically “safe” from U.S. jurisdiction and taxes if you sell from outside the US into the U.S. without the physical presence in the U.S. Look into regulations related to establishing nexus.

Regulations are open for interpretation, which is why they can give conflicting advice.

I would say it's best if you find someone from your country who has experience in entering the US market to advise you.

Good idea, anyone in this forum who has opened a US LLC from offshore tax exempt or 0% tax country?

 

[Golden Fleece]

Thanks, solid advice here. What is the equivalent for accountants?

I disagree. It is not good advice, at least not for the U.S. A legal opinion is just that. A legal opinion. Unless that opinion is clearly negligent, you will have no case for negligence. Bad advice alone is not negligence.

 

[CyprusLaw]

I disagree. It is not good advice, at least not for the U.S. A legal opinion is just that. A legal opinion. Unless that opinion is clearly negligent, you will have no case for negligence. Bad advice alone is not negligence.

Try getting a legal opinion from a lawyer, in writing and signed, good luck with that. You are not getting it unless they are 100% certain for what they will be advising you.

 

[Golden Fleece]

Try getting a legal opinion from a lawyer, in writing and signed, good luck with that. You are not getting it unless they are 100% certain for what they will be advising you.

From an American legal perspective, that is just plain wrong. (The OP mentioned "a foreign owned Delaware LLC" and "US sales taxes and US contractors" in posts two and four, so I assume that U.S. law is at issue.)

If you pay a U.S. attorney for a legal opinion, then you will obtain a "legal opinion from a lawyer, in writing and signed." They will present both sides of the issue and then present their best educated guess as to which view a court or regulatory body might adopt. In other words, lawyers will cover all the bases in their legal opinion.

There is no potential legal liability for the attorney, unless clear negligence is involved, because they presented both sides of the issue and then gave their best estimation of the potential outcome. Obviously, no lawyer can guarantee any outcome -- unless clearly established law is involved (in which case, you do not need a legal opinion) -- and everyone understands this fact.

Based on the various remarks in this thread, things must work quite differently in civil law countries. But the area for discussion in this thread is U.S. law.

 

[CyprusLaw]

From an American legal perspective, that is just plain wrong. (The OP mentioned "a foreign owned Delaware LLC" and "US sales taxes and US contractors" in posts two and four, so I assume that U.S. law is at issue.)

If you pay a U.S. attorney for a legal opinion, then you will obtain a "legal opinion from a lawyer, in writing and signed." They will present both sides of the issue and then present their best educated guess as to which view a court or regulatory body might adopt. In other words, lawyers will cover all the bases in their legal opinion. There is no potential legal liability for the attorney, unless clear negligence is involved, because they presented both sides and then gave their best estimation of the potential outcome. Obviously, no lawyer can guarantee any outcome.

Based on the various remarks in this thread, things must work quite differently in civil law countries. But the area for discussion in this thread is U.S. law.

I work directly with a number of US law firms and I can assure you this is not the general practice, at least from my experience.

 

[Golden Fleece]

I work directly with a number of US law firms and I can assure you this is not the general practice, at least from my experience.

Well, then what is the general practice in your experience?

Obviously, I am talking about legal opinions for which you pay thousands of dollars for the research, analysis, and writing. In essence, you are paying for a legal brief. Just like a legal brief that the same attorney would file in court (but in the form of a letter brief), except that it presents both sides of the issue (instead of arguing just one side of the issue for either a plaintiff or defendant in a lawsuit). If you do not pay for this work (and expect free verbal opinions without research), then you will not get what you want. You must pay for such work.

 

[CyprusLaw]

Well, then what is the general practice in your experience?

Obviously, I am talking about legal opinions for which you pay thousands of dollars for the research, analysis, and writing. In essence, you are paying for a legal brief. Just like a legal brief that the same attorney would file in court (but in the form of a letter brief), except that it presents both sides of the issue (instead of arguing just one side of the issue for either a plaintiff or defendant in a lawsuit). If you do not pay for this work (and expect free verbal opinions without research), then you will not get what you want. You must pay for such work.

A legal opinion is not a legal brief. When you pay for a legal opinion you get legal opinion/advice. In any event the OP should get any advice in writing to be on the safe side. As a Cyprus lawyer I have received legal opinions for clients from US attorneys on multiple occassions and where definately not a general legal brief as you have described above.

 

[Golden Fleece]

A legal opinion is not a legal brief. When you pay for a legal opinion you get legal opinion/advice. In any event the OP should get any advice in writing to be on the safe side. As a Cyprus lawyer I have received legal opinions for clients from US attorneys on multiple occassions and where definately not a general legal brief as you have described above.

A legal opinion is presented to a client and it presents both sides of a legal issue along with an opinion regarding the legal matter involved. A legal brief is filed with a court and provides only one side of the issue on behalf of the client's position. They both discuss the same law, just from different perspectives. Of course, I already stated this fact in my previous post, but you failed to acknowledge it.

Well, at least you have backed off from your earlier claim, which was utter nonsense:

Try getting a legal opinion from a lawyer, in writing and signed, good luck with that. You are not getting it unless they are 100% certain for what they will be advising you.

That is exactly what lawyers do (exploring both sides of a legal issue and rendering an opinion), at least in the U.S.