How Does the IRS Criminal Investigation Voluntary Disclosure Process Work?

Even though the IRS is known for its diligence in tracking down those who defraud the agency, there are always some cases that slip through the cracks. Further, it can sometimes take many years after the tax fraud is perpetrated for the IRS to discover what occurred and seek out the taxpayer for reimbursement as well as potential civil fines and criminal charges if their actions were willful. The IRS’s criminal investigation voluntary disclosure process allows for those who have committed past tax crimes or made willful errors on old returns to get back into compliance without facing criminal prosecution and simultaneously limiting your civil penalty exposure. The catch is, you must voluntarily come forward and admit what you have done before the IRS catches on and begins an audit or criminal tax investigation into your behavior. At the Tax Law Offices of David W. Klasing, our skilled dual licensed Tax Lawyers and CPAs have years of experience successfully guiding clients through the voluntary disclosure process, and we can work to do the same for you. We have never had a client that made a voluntary disclosure face prosecution for a tax crime.

Who is Eligible for the IRS Criminal Investigation Voluntary Disclosure Program?

The voluntary disclosure program is open to everyone who had made willful or non-willful errors in past tax filings (or failures to file) and wishes to come forward, admit to the IRS what they did, and work with the agency to correct the issue and pay the taxes owed and any civil penalties assessed. However, those who have committed non-willful errors or innocent mistakes are often better off trying to amend the returns or going through a foreign or domestic streamlined disclosure program, as they will almost always be assessed much smaller civil fines for their behavior if they go through those channels. If your actions were willful and could expose you to potential criminal liability, on the other hand, you will want to go through the voluntary disclosure program. The only major barrier to entry is the one mentioned in the opening paragraph above: if the IRS is already onto your tax crimes and has opened up an audit or criminal tax investigation into your behavior, it is usually too late, and the IRS will reject your application.

How Do I Apply for the IRS Criminal Voluntary Disclosure Program?

Before going forward with an application for the voluntary disclosure program, you should always contact an experienced dual licensed Tax Attorney and CPA like those at the Tax Law Offices of David W. Klasing so that we can review your situation and be sure that you are making the correct decision and not opening yourself up to more liability than you have to. Once we have presented you with all the facts to make an informed decision, if you choose to go forward with the voluntary disclosure process, we can help you gather and reconstruct the necessary books and records, fill out and submit the required documents, and protect your rights as we guide you through the process to a successful resolution.

The IRS describes the actual process as two-parted. First, you must fill out Part I of Form 14457, Voluntary Disclosure Practice Preclearance Request and Application to request preclearance. Preclearance determines your eligibility for the program but does not guarantee preliminary acceptance. Once this form has been submitted and received by the IRS, your Tax Attorney can reach out to the agency to get a feel for how they see your application and how long and involved the process might become. If the agency believes that you qualify and there is no open criminal tax investigation, audit or examination into the conduct you disclosed, they will grant preliminary approval, after which you will be asked to fill out Part II of the Preclearance Request and Application.

The office of criminal investigations will again review your submission and make a final determination about whether or not you can be accepted into the program. If you are approved, you will be sent a preliminary acceptance letter stating that your matter is being transferred from CI to a civil section of the IRS. You will then be contacted by an IRS examiner who will work with you through the rest of the process. A veteran Voluntary Disclosure Attorney like those at the Tax Law Offices of David W. Klasing will be able to work with the examiner to minimize your civil damages and get you the best possible deal for repayment of the back taxes and the civil fines that will likely be assessed. Once you have completed the program and paid what you owe, you will be free from the threat of criminal tax prosecution for the criminal tax fraud that you disclosed. However, the IRS is likely to keep a close eye on you for a while, meaning you must work to ensure that your returns are complete and accurate and that you do not expose yourself to further liability and a situation where the IRS is likely to be much less forgiving.

If You Believe You Could Benefit from the IRS Criminal Investigation Voluntary Disclosure Process, Contact Our Skilled Tax Attorneys Today

For many people who have committed willful attempts to defraud the IRS in the past, but wish to live without the threat of criminal tax prosecution hanging over them, the criminal investigation voluntary disclosure program is a great way to get back into compliance with a near-guaranteed pass on criminal prosecution. However, the program is not for everyone, and could even be harmful in some cases. For this reason and others, it is imperative to contact a Veteran Domestic and Offshore Voluntary Disclosure Tax Attorney like those at the Tax Law Offices of David W. Klasing before you choose to submit an application. We can review your situation, and if we believe voluntary disclosure could be beneficial to you, we will help guide you through the process in a way that minimizes any damage already caused and protects you from unfair treatment. Call us today at (661) 432-1480 to set up a consultation.

We Are Here for You

Regardless of your business or estate needs, the professionals at the Tax Law Offices of David W. Klasing are here for you. We are open for business and our team will help ensure that your business is too. Contact the Law Offices of David W. Klasing today to discuss your business with one of our professionals.

In addition to our main office in Irvine,  the Tax Law Offices of David W. Klasing has unstaffed (conference room only) satellite offices in Los Angeles, San Bernardino, Santa Barbara, Panorama City, Oxnard, San Diego, Bakersfield, San Jose, San Francisco, Oakland, Carlsbad and Sacramento. During the COVID-19 pandemic, our staff are working from home, but have full virtual meeting capability.

Our office technology allows clients to meet virtually via GoToMeeting. With end-to-end encryption, strong passwords and top-rated reliability, no one is messing with your meeting. To schedule a reduced rate initial consultation via GoToMeeting follow this link.   Call our office and request a GoToMeeting if you are an existing client.

Note:  As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed returns coupled with affirmative evasion of payment) self-reports the tax fraud (including a pattern of non-filed returns) through a domestic or offshore voluntary disclosure before the IRS has started an audit or criminal tax investigation / prosecution, the taxpayer can ordinarily be successfully brought back into tax compliance and receive a nearly guaranteed pass on criminal tax prosecution and simultaneously often receive a break on the civil penalties that would otherwise apply. 

It is imperative that you hire an experienced and reputable criminal tax defense attorney to take you through the voluntary disclosure process.  Only an Attorney has the Attorney Client Privilege and Work Product Privileges that will prevent the very professional that you hire from being potentially being forced to become a witness against you, especially where they prepared the returns that need to be amended, in a subsequent criminal tax audit, investigation or prosecution.

Moreover, only an Attorney can enter you into a voluntary disclosure without engaging in the unauthorized practice of law (a crime in itself). Only an Attorney trained in Criminal Tax Defense fully understands the risks and rewards involved in voluntary disclosures and how to protect you if you do not qualify for a voluntary disclosure.

As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, Kovel CPAs and EAs, our firm provides a one stop shop to efficiently achieve the optimal and predictable results that simultaneously protect your liberty and your net worth.   See our Testimonials to see what our clients have to say about us!

Questions and Answers about Offshore Voluntary Disclosure Initiative (OVDI)

• Why hire David W. Klasing to represent me in an audit
• 2011 Offshore Voluntary Disclosure Initiative FAQ
• Key Features of Initiative
• Eligibility For This Initiative
• 2011 OVDI Process
• Calculating The Offshore Penalty
• Statute of Limitations
• FBAR Questions
• Taxpayer Representatives
• Case Resolution
• What not to do!
• What to do!
• FBAR Reporting and Expired Voluntary Disclosure Program
• How the Law Offices of David W. Klasing Can Help
• Bank account overseas I didn’t report on my income tax
• Do I have to maintain information on overseas bank accounts

Questions and Answers about FBAR Compliance and Disclosure

• Potential charges for not participating in the 2014 OVDP
• How many tax returns will I amend for my FBAR filing?
• FBAR Voluntary Disclosure program end
• Can I make a voluntary disclosure after the deadline?
• Can I use IRS Voluntary Disclosure if I Can’t Pay?
• Potential reporting requirements and civil penalties
• What Happens if You Don’t Disclose Foreign Accounts
• Criminal charges if you refuse voluntary disclosure
• Characteristics of FBAR voluntary disclosures
• What is required to make a valid voluntary disclosure?
• 2012 Offshore Voluntary Disclosure Initiative Objectives
• What is an FBAR?
• Filed amended returns without making a Voluntary Disclosure
• Undisclosed foreign accounts: What exchange rate to use
• Why did the IRS announce the 2012 OVDI at this time?
• Should I consider making an offshore voluntary disclosure?
• Why to consider making a Voluntary Disclosure
• 2012 OVDI program vs. the voluntary disclosure practice
• Foreign bank account asset reporting/filing requirements

Questions and Answers About Foreign Tax Audits

• Does the Fifth Amendment apply to foreign accounts?
• How is evidence cultivated from foreign sources?
• How is tax loss determined?
• How might an FBAR audit be resolved?
• Is a penalty assessment ripe for judicial review?
• Overview of an administrative criminal investigation
• What is the process of an FBAR referral?
• Statute of Limitations raised during a FBAR audit?
• Precautions to be taken in the pre-audit phase
• Recent international tax and reporting prosecutions
• Foreign account, entity and investment prosecution
• Who collects restitution and penalties?
• International tax investigations are an IRS high priority

Questions and Answers About Tax Evasion

• What is a tax shelter? What are some examples?
• How does the IRS attack tax shelters on IRC Section 183
• Relationship between Section 183 and other tax doctrines
• The difference between tax evasion and tax avoidance
• What is the Step Transaction Doctrine?
• What is the Sham Transaction Doctrine?
• What is the Business Purpose Test?
• What is the Economic Substance Doctrine?
• What is the substance over form doctrine
• What are the passive loss limitation rules
• Does IRC Section 269 Disallow a Net Operating Loss?
• IRC Section 269 and when it disallows a net operating loss
• What are the listed transactions and what do they mean?
• At risk limitation and how it prevents claiming deductions
• What are the reportable transactions?
• Does the government regulate tax advisors?
• Advisor tax opinion letter Circular 230 dictate standards
• Tax advisor fails to meet the minimal competency standards
• Is my tax advisor liable for helping me commit tax evasion?
• Statute of limitations for preparing false tax returns

Questions and Answers for Criminal Tax Representation

• When tax defense counsel parallels tax crime investigation
• Guilty of tax obstruction by backdating documents?
• To be found guilty of tax obstruction must a person actually be successful in impeding the IRS’s functions?
• Help! The Document I Gave the IRS Had False Information
• Tax crime aiding or assisting false return IRC §7206(2)
• What is the crime known as tax obstruction § 7212?
• What is the difference between tax perjury and tax evasion?
• What is the tax crime commonly known as tax perjury?
• What is a Klein Conspiracy?
• Increased possibility of civil action in IRS investigation
• Am I Guilty of Tax Evasion if the Law is Vague?
• What happens if the IRS thinks I committed tax crimes?
• What are ways to defend against a tax evasion charge?
• Difference between criminal tax evasion and civil tax fraud
• What accounting method does the IRS use for tax fraud
• Can I Change Accounting Method to the Accrual Method
• What is the willfulness requirement for tax evasion?
• I didn’t know I committed tax fraud. Can I get off?
• Concealed assets from IRS. Can I avoid tax evasion charges
• How government proves I willfully engaged in tax evasion
• What is the venue or court where a tax crime case is heard?
• Must the IRS prove tax crimes beyond a reasonable doubt?
• Is it a crime to make false statements to the IRS?
• Will the IRS overlook my tax evasion if it’s minor?
• Failed to tell IRS about my nominee account
• Audit risk with cash based business transactions
• How to defend a client charged with tax evasion
• Is it tax evasion if I didn’t file income tax return?
• Government says I attempted to evade my taxes. Now what?
• I forgot to pay my taxes or estimated tax. Is this a crime?
• Government proof I “willfully” failed to pay taxes
• 5 Ways to Respond to Tax Evasion Charges
• Being audited after using a tax professional
• Rules for what an IRS agent can do while investigating me
• How tax preparers, attorneys and accountants are punished
• How the IRS selects tax crime lead for investigation
• How does the IRS prosecute suspected tax crimes?
• Does IRS reward informant leads for suspected tax crimes?
• How the government proves deficiency in a tax evasion case
• Do prior tax crimes factor into new IRS tax convictions?
• Requesting conference before investigative report is done
• Requesting conference after IRS Special Agent Report
• What are my rights during an IRS criminal investigation?
• Avoid prosecution for tax crime with voluntary disclosure?
• Defense tactics that make it hard for to prove willfulness
• How a tax attorney can stop your criminal tax case?
• What can you generally tell me about tax crimes?
• Continuing filing requirement with investigation pending
• Federal criminal code crimes that apply to tax issues
• Penalty for making, subscribing, and filing a false return
• CID special agent’s report for criminal prosecution
• What is the discovery process in a criminal tax case?
• What the IRS includes in indictment for tax case
• What is the hardest element of a tax crime to prove?
• IRS methods of gathering evidence to prove tax crime
• What does a grand jury do in IRS tax crime prosecution?
• Failure to keep records or supply information
• Failure to make a return, supply information, or pay tax
• What is attempting to evade payment of taxes?
• What is income tax evasion and how is it punished?
• What is attempted income tax evasion?
• What is the crime of failure to pay tax? What is punishment
• Crime of making or subscribing false return or document
• Criminal Investigation Division investigation tactics
• Tax crimes related to employment tax forms and trust funds
• Tactics to defend or mitigate IRS criminal tax charges
• How the IRS generates leads about suspected tax crimes
• What is the crime ”evasion of assessment” of tax?
• Specific examples of “attempting” to evade tax assessment
• What is the so-called Spies evasion doctrine?
• Does overstating deductions constitute tax evasion?
• Is it tax evasion if my W-4 contains false statements?
• IRC §7201 attempt to evade vs. common-law crime of attempt
• What are the penalties for Spies tax evasion?
• How government proves a taxpayer attempted tax fraud
• What is a tax that was “due and owing.”
• What is evasion of assessment for tax liability?
• Is evasion of assessment different from evasion of payment
• Does the IRS have a dollar threshold for tax fraud?
• What is the IRS burden of proof for tax fraud convictions?
• Are Tax Laws Constitutional?
• What is the source of law that defines tax evasion?
• Does section 7201 create two distinct criminal offenses?
• Does tax evasion definition include partnership LLC
• What if I helped someone else evade taxes?
• Is it illegal to overstate deductions on my tax return?
• Is it illegal to conceal bank accounts from the IRS?
• Do later losses justify prior deductions?
• Common reasons the IRS and DOJ start investigations
• What is the Mens Rea component of tax crimes?
• What is a proffer agreement and what are the risks?
• Why to have an attorney to review a proffer agreement
• Why enter into a proffer agreement?
• Limited use immunity from proffer agreements
• Difference between civil and criminal fraud allegations