When (and How) Should You Submit a Voluntary Disclosure to the IRS?

When you owe back taxes, interest, and penalties to the Internal Revenue Service (IRS), coming forward proactively is generally the best approach. In many cases, this will involve submitting a voluntary disclosure. When (and how) should you submit a voluntary disclosure to the IRS? Find out from New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

When Should You Submit a Voluntary Disclosure to the IRS?

U.S. taxpayers can submit voluntary disclosures to the IRS to resolve willful tax law violations (for those who need to resolve non-willful violations, other options are available). This includes, but is by no means limited to, violations such as:

• Failing to report income sources
• Underreporting taxable income
• Claiming fraudulent deductions or exemptions
• Improperly calculating payroll taxes
• Failing to disclose offshore bank accounts or other foreign financial assets

A tax law violation is considered “willful” if the violation is “[an] intentional, purposeful, deliberate act to hide income or assets and therefore evade filing requirements or payment of tax.” Again, this could involve underreporting, underpayment, and various other acts and omissions.

In addition to being prepared to disclose a willful tax law violation, U.S. taxpayers seeking to submit voluntary disclosures must meet other eligibility criteria. Most significantly, to submit a voluntary disclosure, a taxpayer must not be the subject of an ongoing IRS audit or criminal tax fraud investigation.

How Do You Submit a Voluntary Disclosure to the IRS?

For eligible taxpayers, submitting a voluntary disclosure is a multi-step process. Due to the complexity of the process—and the potentially serious ramifications of voluntarily disclosing a willful tax law violation to the IRS—experienced legal representation is essential. The major steps in the process are:

• Seeking “preclearance” from IRS Criminal Investigation (IRS CI)
• Submitting a Voluntary Disclosure Application
• Submitting all required documentation to the civil examiner assigned to your case
• Working with the civil examiner to accurately determine your outstanding liability
• Paying your outstanding liability in full (either in a lump sum or pursuant to a full-pay installment agreement)

Various deadlines apply throughout the process, and it is imperative that taxpayers make informed, strategic decisions focused on achieving an amicable result. Even once the IRS accepts a taxpayer’s application to participate in the Voluntary Disclosure Program, there is no guarantee that the process will be successful. If the process is unsuccessful for any reason, the IRS can use the information the taxpayer has voluntarily disclosed to pursue enforcement as warranted.

Schedule a Confidential Consultation with New York Tax Attorney Kevin E. Thorn

New York tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, has extensive experience representing clients during the voluntary disclosure process. If you need more information about the process, we invite you to get in touch. To schedule a confidential consultation with Mr. Thorn as soon as possible, please call 914-534-6004 or contact us confidentially online today.