It’s mandatory for every taxpayer in the U.S to comply with the Internal Revenue Service and federal tax laws. Taxpayers are required to pay off any money they own to the government promptly and ensure they file all the required documents. Failing to fulfill any federal tax obligations can put you under the radar of the IRS who may penalize you. If you have offshore properties or businesses, it’s essential to ensure you disclose all your assets to the government appropriately. You can also seek help from tax law firm Virginia Beach to explore the option of voluntary compliance.
In this blog, find more about Voluntary Disclosure Program and how you can use it to avoid criminal and civil prosecution risks.
What is the IRS’ Voluntary Disclosure Practice?
Virginia has an ongoing voluntary disclosure program through which the state encourages non-registered taxpayers and taxpayers with unreported tax liabilities to come forward and fulfill their tax obligations. In exchange, the state promises to limit the IRS audit lookback period and reduce the person’s tax debt. While Voluntary disclosure may sound like a lucrative proposal, one must be extremely careful when using it.
Voluntary disclosure is a high-risk option and should be used under the careful guidance of a certified IRS lawyer Virginia Beach. Since one has to admit to violating the federal tax laws, one should contemplate all the IRS’ Voluntary Disclosure Program aspects. You can also choose other alternatives and options. However, make sure the documents you furnish to the IRS are appropriate and can’t be used as evidence for a criminal penalty.
As IRS Criminal Investigations (CI) explains:
The IRS undertakes criminal Investigations on taxpayers who are un-reporting or under-reporting their taxes. The Criminal Investigation Division of the IRS considers voluntary disclosures when recommending criminal prosecution. Taxpayers must note that voluntary disclosure does not prevent one from undergoing criminal prosecution, but the investigators may not recommend prosecution.
The voluntary Disclosure Practice option allows tax offenders to comply with the federal tax law. If you have not committed a tax offense willfully, you can choose other options.
Voluntary disclosure doesn’t eliminate the risk of criminal prosecution. However, if you disclose accurate and complete tax information, there are high chances your risk will reduce.
What are the alternatives to the Voluntary Disclosure Practice?
Even if you have not willfully committed a tax offense or falling behind paying off your federal taxes, you can be prosecuted by the IRS. However, depending on your circumstances, you can choose other options for self-disclosure of your tax crimes.
- Make corrections to your federal tax returns;
- Filing a delinquent return;
- For undisclosed overseas assets, you can use the IRS’ Streamlined Filing Compliance Procedures;
- FBAR submission process;
- Negotiation with the IRS.
The method to choose to disclose your assets and tax offenses will largely depend upon your circumstances. Seeking legal counsel from a qualified tax law firm in Virginia Beach will help you make an informed decision.
After completing the voluntary disclosure process, the IRS will be less likely to investigate your tax returns. Since IRS has limited resources, they are more focused on enforcing investigations on taxpayers who unreported their income and assets.