Voluntary Disclosure

The Voluntary Disclosure Program (“VDP”) enables taxpayers who have previously failed to report income or committed other tax crimes to come into compliance with the IRS and to avoid criminal and other civil charges.

If you are ready to come forward, this program can save you from being criminally prosecuted and being subject to significant fines and penalties. The full-service tax law firm of Moskowitz, LLP is experienced with making voluntary disclosures and in determining the best way to proceed.

Qualifying for the Voluntary Disclosure Program

The IRS is unlikely to recommend criminal prosecution if you do all the following:

  • Before being contacted by the IRS, inform the agency that you have not filed one or more tax returns or did not disclose all your sources of income;
  • File true and correct tax returns and/or cooperate with the IRS in ascertaining your correct tax liability; and
  • Make full payment of the amount due or make alternative arrangements to pay.

You can instead opt for a “quiet disclosure,” which involves amending prior tax returns to include previously unreported income, paying the tax difference, interest, and late (20% accuracy-related) penalty, and taking your chances that the IRS will not pursue criminal charges. Note that this leaves you open to the possibility of a 75% civil tax fraud penalty assessment and prison time.

Keep in mind that will not be admitted to the VDP if you are currently under a civil examination or criminal investigation, or if you earned the unreported income through illegal activities.

If you have unreported foreign income and/or assets

The VDP is only for U.S. taxpayers with domestic unreported income. If the income was foreign-sourced (or a combination of domestic and foreign), speak to us about the Offshore Voluntary Disclosure Program (OVDP) and other remedies.

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