In recent years, the IRS has greatly expanded its voluntary disclosure program, where taxpayers who have committed intentional or unintentional violations of the tax code can be brought back into compliance without facing criminal tax charges or the most severe civil penalties. Although the popular offshore voluntary disclosure program (OVDP) for foreign bank and financial accounts has ended, most of its components have been rolled over into the agency’s new, comprehensive disclosure program.
While this program is an excellent option for many taxpayers who are out of compliance, it does not come without its downsides. The IRS, for example, can, in some circumstances, share information disclosed during this process with state and local authorities who can use it to assess further penalties against you. Our skilled Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing can evaluate your situation and disclose all risks to you before you decide to enter a voluntary disclosure program.
The voluntary disclosure program allows taxpayers who have committed past tax crimes to be brought back into compliance in almost all cases without facing criminal tax charges. The key is that you must disclose your fraudulent behavior and correct the returns before the IRS opens an audit or a criminal tax investigation into your returns. At the Tax Law Offices of David W. Klasing, our skilled Tax Lawyers and CPAs have years of experience successfully guiding our clients through the voluntary disclosure program and bringing them back into compliance. In fact, at times our voluntary disclosure work has accounted for 80% of our book of business.
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 disclosurebefore 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 voluntary disclosure.
As uniquely qualified and extensively experienced Criminal Tax Defense Tax Attorneys, KovelCPAs 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!
While the IRS’s voluntary disclosure program might shield the taxpayer from criminal tax charges stemming from IRS-initiated criminal tax investigations, it does not necessarily foreclose criminal tax charges by state or local (or other federal) agencies with whom the IRS has shared your information. This begs the question of what kind of information that you disclose during the voluntary disclosure program the IRS is permitted to share with state or local agencies. The answer is that they can sometimes share a lot of information, but it depends on the circumstances. You should always consult with a skilled Tax Attorney like those at the Tax Law Offices of David W. Klasing before entering into any sort of disclosure agreement with the IRS.
According to one blogger’s recent chat with Grace Albinson from DOJ Tax CES and Richard “Rick” Goss, from IRS International Operations, Criminal Investigation, the following are some of the instances in which your return and other information can be shared with other agencies.
According to Ms. Albinson, Section 6103(d) of the IRS code allows for disclosure to state agencies of return information shared with the IRS by taxpayers. However, the agency is only required to disclose information in states “with which the Commissioner of the Internal Revenue Service has entered into an agreement regarding disclosure.” These disclosures can only be made for state tax administration purposes. This includes state agencies involved in criminal tax enforcement but not agencies involved in non-tax enforcement. As such, information shared with the IRS as part of the voluntary disclosure program cannot be shared for investigations by non-tax agencies into non-tax crimes. If you disclose information that can implicate you for state tax crimes, however, there is a chance you can still be prosecuted at the state level even if voluntary disclosure gives you a pass on federal criminal charges.
This is somewhat of a loophole explained by Mr. Goss that could end up being a major deal for some folks. If, for example, something in your return suggests that you are involved in the Los Angeles drug trade, the agent will be permitted to contact local, state or federal drug enforcement authorities to find out if they have an open investigation into your activity or any other information that could corroborate their suspicion. The agent cannot disclose specific information about crimes for which the taxpayer is being investigated. However, they can ask questions that might cause the agent or investigator from the other agency to infer something that could, in turn, lead them to open a separate investigation into your conduct.
As per Ms. Albinson, there are certain situations where the IRS may be compelled to share information, including that obtained through the voluntary disclosure program, to certain federal agencies for non-tax purposes. For example, return information must be handed over if compelled by an ex parte order of a district judge or federal grand jury investigating you for tax or non-tax crimes. Agents are also permitted to disclose information “which may constitute evidence of a violation of any Federal criminal law (not involving tax administration) to the extent necessary to apprise the head of the appropriate Federal agency charged with the responsibility of enforcing such law.” Additionally, return information other than taxpayer return information typically must be handed over upon request from a department head. Information can also be disclosed to federal or state agencies if it involves an imminent danger of death or physical injury to a person or people, is necessary to prevent a defendant from fleeing, or the information is related to terrorist activities.
The above situations are only some of the times that the IRS is permitted to share information given to them during the voluntary disclosure process with agents at other state, local, or federal agencies. Before signing up for any sort of voluntary disclosure program, it is crucial to have a skilled tax lawyer and CPA like those at the Tax Law Offices of David W. Klasing assess the particulars of your situation and be sure you are not opening yourself up to serious liability. Call us today at (800) 681-1295 to set up a consultation.
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