IRS Announces Updated Voluntary Disclosure Procedures

 Posted on January 03, 2019 in Taxation Law

If it has come to your attention that your tax filings may not be in compliance with U.S. tax laws and regulations, and you may be concerned you could face criminal liability, the IRS Offshore Voluntary Disclosure Program (OVDP) may provide a means to rectify your noncompliance status. 

About the Offshore Voluntary Disclosure Program

The OVDP applies to tax issues related to unreported offshore income or assets. The OVDP was created for taxpayers who are concerned the IRS will view their conduct as willful or fraudulent. Under the law, a taxpayer’s failure to report offshore financial assets and fully pay the taxes due related to such assets may lead to criminal charges. Allowing for voluntary disclosure once tax returns have been filed is a way a taxpayer may be able to avoid criminal prosecution.

In order to utilize the OVDP, certain requirements must be met and certain procedures must be followed. Several iterations of the OVDP have been in effect over the past few years. The IRS ended one disclosure program on September 28, 2018 and announced new rules that would affect disclosures made after that date.

Voluntary Disclosure Program Procedure

Those seeking to make use of the OVDP under the current rules must take the following steps:

1. Submit a preclearance request to the IRS Criminal Investigation (CI) department. CI will determine if the taxpayer meets the criteria to make a voluntary disclosure. Internal Revenue Manual (IRM) 9.5.11.9 will be used to determine taxpayer eligibility. 
2. If CI approves the preclearance, all documentation related to voluntary disclosure must be submitted in a timely manner. Taxpayers will be asked to give a statement as to the facts and circumstances of the case, as well as all assets, business or professional entities, professional business or tax advisors, or other related entities involved in the noncompliance. 
3. After CI has obtained and preliminarily accepted the taxpayer's voluntary disclosure, CI sends the materials to the IRS's Large Business & International division in Austin, TX for case preparation in advance of the examination. 
4. Next, the LB&I Austin unit will send the file for case building and assignment to the proper IRS Business Operating Division and Exam function for civil examination.
5. Typically, voluntary disclosures result in the taxpayer paying taxes, interest, and penalties for the time period at issue. If this is done and accepted by the IRS, the taxpayer will potentially avoid criminal prosecution.

Contact a San Jose, CA Taxation Law Attorney

Taking advantage of the OVDP can be a beneficial option for taxpayers in certain circumstances and particularly those who fear criminal prosecution. Before a taxpayer avails him or herself of the OVDP, a skilled San Jose, CA offshore tax lawyer should be consulted.

Utilizing the OVDP means that the IRS will be carefully reviewing your tax filings and other sensitive documentation. Anytime you give information to a government agency, you should consult an attorney, especially if you believe that criminal liability is possible. At John D. Teter Law Offices, we understand what the IRS will be looking for in evaluating if you qualify for the disclosure program. 

For more information on how the OVDP could be helpful for your case, call our firm today at 408-866-1810.

Source:

https://www.irs.gov/pub/spder/lbi-09-1118-014.pdf