Applying for the IRS' Voluntary Disclosure Program: Key Considerations for U.S. Taxpayers

Taxpayers who are behind on their federal tax obligations are at risk of facing scrutiny from the Internal Revenue Service (IRS). This scrutiny—whether in the form of an audit or a criminal tax investigation—can pose substantial risks. Both types of inquiries can lead to liability for back taxes, interest, and penalties, and criminal investigations can also carry the risk of prison time. Mitigating these risks involves taking a proactive approach with the help of an experienced attorney. Learn more from Washington D.C. tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group:

Applying for the IRS’ Voluntary Disclosure Program to Avoid a High-Risk Audit or Investigation

The IRS’ Voluntary Disclosure Program provides a means for U.S. taxpayers to proactively resolve willful tax law violations. Willfully violating the Internal Revenue Code (IRC), Bank Secrecy Act (BSA), Foreign Account Tax Compliance Act (FATCA), and other pertinent federal statutes can expose taxpayers to criminal penalties, and disclosing willful violations through other means can tip off the IRS that enforcement action is warranted.

While submitting a voluntary disclosure does not guarantee protection from criminal prosecution, the process is designed to allow taxpayers to come forward with confidence that doing so will not result in an indictment.

Submitting a voluntary disclosure starts with applying for “preclearance” from IRS Criminal Investigation (IRS CI). As IRS CI explains:

“There is a two-part electronic application process to request participation in the [Voluntary Disclosure Program]. Part I is a preclearance to determine your eligibility for the program and Part II is a determination of your preliminary acceptance.”

Due to the challenges and risks of the voluntary disclosure process, working closely with experienced tax counsel is strongly recommended. An experienced Washington D.C. tax attorney should be able to not only assess a taxpayer’s eligibility to participate in the Voluntary Disclosure Program, but also assist the taxpayer with coming forward through the appropriate means.

Strict Eligibility Criteria Apply

Importantly, committing a willful tax law violation is not the only eligibility requirement for submitting a voluntary disclosure. Several other eligibility criteria apply as well. These include (but are not limited to):

• Being prepared to work with the IRS to determine how much tax is owed;
• Being prepared to pay in full or enter into a full-pay installment agreement; and, 
• Not being the subject of a pending IRS audit or criminal tax investigation.

Taxpayers won’t necessarily know whether a criminal tax investigation is pending. As a result, engaging legal counsel who can proactively engage with IRS CI on their behalf is critical. Since time may be of the essence, those with questions about submitting a voluntary disclosure should consult experienced tax counsel as soon as possible.

Schedule a Confidential Consultation with Washington D.C. Tax Attorney Kevin E. Thorn

If you have questions about submitting a voluntary disclosure, we encourage you to contact us promptly. To schedule a confidential consultation with Washington D.C. tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, call 202-349-4033 or contact us confidentially online now.