With the emergence of spring also comes tax season. If you live and work in the U.S., you have a legal obligation to comply with the nation’s tax laws. Should you fail to file or pay your taxes each year, you may face serious consequences, including fines and the possibility of a prison sentence.
If you purposely did not comply with federal tax laws, participating in the voluntary disclosure practice may offer a path toward resolving the issue with limited potential for criminal repercussions.
Resolving compliance issues
According to the Internal Revenue Service, through voluntary disclosure, you may report your failed compliance to IRS Criminal Investigation. In order to benefit from self-reporting, you must disclose your actions to CI before a criminal investigation or civil examination has commenced, the IRS acquires information regarding your noncompliance via criminal enforcement action or the otherwise received information from a third party alerting the agency to your failed compliance. While making a voluntary disclosure does not automatically shield you from criminal consequences, authorities may take your cooperation into consideration and advise against prosecution.
Applying for participation
Provided you willfully did not comply with the tax laws and receive income from legal sources, you may participate in the voluntary disclosure practice. To request participation, you must complete and submit the required application form to the IRS. Should you receive preclearance confirmation, you must submit part II of the voluntary disclosure application. CI then reviews the submission and makes a determination regarding your participation. An examiner may then be assigned to your case and will work with you to assess your correct tax liability and make arrangements to pay your taxes, interest and any penalties.