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In the bustling, dynamic landscape of New York, adherence to federal tax laws is as crucial as in any part of the United States. Just as the city is renowned for its distinctive skyline and unparalleled vibrancy, it is equally known for its strict adherence to the complex tapestry of federal tax regulations that govern domestic and offshore financial activities. The Internal Revenue Service (IRS) mandates every taxpayer in the Empire State to comply diligently with federal tax laws, ensuring their domestic and offshore financial activities are transparent and lawful.
For New York taxpayers who find themselves under the scrutinizing gaze of the IRS due to undisclosed foreign accounts or unreported offshore assets generating unreported yet taxable income, the journey back to tax compliance can be daunting and intricate. The stakes are high, with severe civil tax penalties and exponentially severe criminal tax consequences potentially arising from deliberate tax non-compliance.
With its towering skyscrapers and vibrant economic activity, New York is not exempt from the stringent federal tax laws that govern the rest of the nation. These laws operate fundamentally on the principle of “voluntary compliance.” Failure to comply voluntarily with these federal mandates can lead to harsh civil and criminal tax penalties, including substantial fines, criminal tax prosecution, restitution, and other punitive measures imposed by the IRS.
However, amidst the complexity and challenge, there is a beacon of hope for New York taxpayers. If you have willfully engaged in tax fraud, such as neglecting to file foreign information returns or intentionally evading U.S. income tax on offshore income, there is a viable pathway to absolution through domestic or offshore voluntary disclosure. Proactively reporting these discrepancies before an IRS audit or criminal tax investigation is initiated offers a nearly guaranteed opportunity to return to tax compliance without facing criminal tax prosecution. This proactive approach significantly mitigates the risk of potential criminal tax prosecution. It often leads to reduced civil tax penalties, offering a vital safety net for New York taxpayers maneuvering through such challenges.
What is an IRS Voluntary Disclosure?
Voluntary disclosure is a proactive initiative where taxpayers willingly correct past mistakes or omissions in their tax filings with the Internal Revenue Service (IRS). This action is imperative for individuals in New York who have intentionally or unintentionally failed to report income, neglected to pay due taxes, or committed similar errors, leading to accrued interest and substantial civil or criminal tax penalties.
The IRS Criminal Investigation (CI) has traditionally offered the Voluntary Disclosure Practice (VDP) as a silent but valuable resource for taxpayers. The VDP is a discretionary program that is pivotal when CI decides whether to recommend criminal tax prosecution. While voluntary disclosure doesn’t guarantee immunity from prosecution, meeting the program’s terms typically shields you from criminal tax proceedings. Your disclosure must be truthful, timely, and comprehensive to qualify for these protections. This means you must proactively engage with the IRS, making arrangements in good faith to settle your tax, interest, and any penalties due. Furthermore, you must collaborate with the IRS to ascertain your true tax liability.
Through voluntary disclosure, eligible taxpayers can systematically address these issues. This approach not only mitigates the risks associated with eggshell audits, criminal tax investigations, and federal felony prosecutions but often results in reduced civil tax penalties as well. It serves as a vital safety net for individuals navigating the complexities of both domestic and offshore tax compliance challenges in New York.
However, it’s crucial to acknowledge that voluntary disclosure isn’t a universal remedy. The IRS might decline some submissions; not every taxpayer’s situation is apt for this approach. The new Department of Justice Tax Division’s Voluntary Disclosure Policy encourages entities, including but not limited to partnerships, government entities, and unincorporated associations, to make voluntary disclosures to the Tax Division. This is advisable even if there’s suspicion that the government might already be aware of their tax misconduct. While full benefits might not be available in such scenarios, these entities can still garner some advantages, primarily in reduced tax penalties.
The updated policy stipulates that self-disclosures related to internal revenue laws must be directed to the Department of Justice Tax Division. This might seem to depart from the traditional practice of disclosing to the IRS. However, it’s vital to understand that the IRS is not excluded from the process. Disclosures made to the IRS under its established practices are still valid and acknowledged, providing a nearly guaranteed opportunity for taxpayers to return to tax compliance without facing criminal prosecution.
Why Should You Be Concerned About Past Tax Non-Compliance Now?
In an era where the IRS is increasingly vigilant and adept at uncovering intentional non-compliance with federal tax filings, addressing any past undisclosed foreign accounts, assets, or unreported domestic or foreign income is crucial. Even if past discrepancies have been overlooked, the current environment of enhanced scrutiny necessitates prioritizing federal tax compliance.
For instance, during divorce proceedings, a forensic accountant might unearth tax fraud committed by one spouse. This information could not only be used as leverage for a larger settlement but might also be disclosed on the public record in the courtroom. Such admissions attract the attention of the IRS, which is known to peruse court records for signs of non-compliance, leading to a clandestine criminal tax investigation.
Similarly, a growing business might disclose a secondary set of books to a potential buyer. This buyer, now privy to the extra information, could use this as a bargaining chip, threatening to report these hidden accounts to the IRS unless they can purchase at a lower acquisition cost. Moreover, a business owner undergoing a New York state-level audit might inadvertently raise red flags about federal fraudulent activities.
These scenarios are just a few examples of how intentional non-compliant behavior could be exposed, potentially leading to criminal tax charges. Several other factors could significantly increase the likelihood of the IRS uncovering such behavior:
· Increased International Cooperation: The United States has established various agreements to share tax-related information with other countries, facilitating a global approach to tax compliance. Initiatives such as the Foreign Account Tax Compliance Act (FATCA) have significantly bolstered the IRS’s capacity to detect offshore tax evasion, making previously undetected non-compliance increasingly likely to surface.
· Technological Advances: The IRS continues to leverage advanced data analytics and other technology to detect patterns of intentional non-compliance and potential tax evasion more effectively, making it more likely than ever to identify discrepancies in tax filings.
· Whistleblower Incentives:The IRS whistleblower program incentivizes individuals with knowledge of intentional tax non-compliance to report it, sometimes offering financial rewards. This incentive can prompt individuals, like aggrieved employees or business partners, to expose previously undetected non-compliance.
· Voluntary Disclosure Policy: This policy encourages entities to disclose intentional tax-related misconduct proactively, increasing the likelihood of detecting non-compliance among those who haven’t voluntarily come forward.
Navigating the intricate maze of tax compliance can be overwhelming, especially when faced with a history of intentional non-compliance. The gravity of such situations is undeniable, but a beacon of hope exists in proactive voluntary disclosure. By willingly unveiling oversights or deliberate evasion before the onset of a tax audit or criminal tax investigation, taxpayers are presented with a golden opportunity to regain compliance and sidestep the dire consequences of criminal prosecution for tax crimes. As we delve deeper into this realm, having a trusted guide is paramount. Enter the Tax Law Offices of David W. Klasing, a beacon of expertise and assurance in these tumultuous waters.
Why Choose the Tax Law Offices of David W Klasing
Choosing the Tax Law Offices of David W. Klasing is your first step towards stress-free voluntary disclosure. Our dedicated team of dual-licensed Voluntary Disclosure Attorneys and CPAs bring years of experience and expertise to guide you seamlessly through the intricate voluntary disclosure process. We understand the nuances and complexities of the DOJ Tax Division’s Corporate Voluntary Self-Disclosure Policy and the IRS Voluntary Disclosure Practice, ensuring you make informed and strategic decisions at every step.
As your dedicated partner, we ensure you can confidently navigate the voluntary self-disclosure process while safeguarding your company’s reputation and business relationships. We appreciate the pivotal role of timing in making a disclosure, the necessity of meeting disclosure obligations, and the significance of the discretion exercised by the tax division. Our team is equipped to assist clients in preparing comprehensive initial disclosures, confirming that all pertinent facts, documents, and return information are presented transparently and cooperatively.
Even when it may seem impossible to gain full benefits from voluntary disclosure, our team works diligently to leverage every available advantage to protect your financial interests. At the Tax Law Offices of David W. Klasing, we offer guidance to corporations & partnerships navigating the intricate landscape of potential civil tax fraud penalties, which could be as high as 75% of the additional tax evaded. Recognizing the crucial role of timing in voluntary disclosure, the imperative to fulfill disclosure obligations diligently, and the need for discretion by the tax division, we offer tailored assistance to our clients.
Note: Tax fraud is not subject to a civil statute of limitations, meaning it can be pursued at any time. Tax crimes can ordinarily only be prosecuted within a six-year statute of limitations, but be aware that lying about a tax crime can constitute the last affirmative act of the crime, which could bring it into an open tax year, subjecting it to prosecution even after six years have passed. Said another way, any present-day misconduct, like providing false information to a federal agent concerning a past tax return, can trigger a new six-year statute of limitations. Moreover, it’s important to remember that tax returns are submitted under oath, making any misrepresentation potentially perjurious & lying to a federal agent is a felony in its own right.
Our seasoned team is adept at preparing thorough initial disclosures, ensuring that all relevant facts, documents, and return information are presented with transparency and cooperation. The Tax Law Office of David W. Klasing is not just another legal office in the city; it’s a nexus of federal tax proficiency led by one of the nation’s most uniquely qualified civil and criminal tax controversy defense professionals. While the nation boasts approximately 1.1 million attorneys and 560k CPAs, an estimated mere 24k hold both prestigious designations. Dive deeper, and you’ll find that an even smaller elite group, roughly 3,000, have additionally earned a Master’s in Taxation. David W. Klasing is a proud member of this exclusive cadre.
Whether you have queries about personal or business tax compliance or federal-level voluntary disclosure programs, our award-winning tax professionals at the Tax Law Office of David W. Klasing are here to offer you clarity, guidance, and dedicated support, not just promises but guarantees. Recognizing the city’s fast-paced dynamics, we’ve implemented a flexible scheduling system, allowing clients to secure a four-hour flat fee meeting across any satellite location. This would need to be proceeded by a one-hour phone or encrypted go-to-meeting to warrant travel to the East Coast to ensure that we are a good fit before committing to the travel required. David W. Klasing, committed to providing a personalized experience, will personally travel to any of our virtual offices, ensuring clients receive a direct and tailored encounter without additional travel expenses.
Access to our services is as easy as a call to 800-681-1295 or clicking the following link to schedule a reduced-rate initial consultation, and we will be there to address your federal tax concerns. David’s proven proficiency is now available in New York at our appointment-only satellite office, providing both legal and tax services in one place—at a single hourly billing rate.
In addition to our fully staffed 19,700 square foot penthouse 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, Sacramento, Las Vegas, Nevada; Salt Lake City, Utah; Phoenix, Arizona, and Albuquerque, New Mexico. We also have virtual offices in Austin, Texas; Miami, Florida; and Washington, D.C.
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