Awards & Recognition
San Francisco, California’s iconic city, is renowned for its mild climate, picturesque landscapes, and robust economy. As a major urban center, San Francisco is a bustling hub of economic activity with innovative start-ups and major corporations. These businesses drive the city’s dynamic growth but require careful management of the complex federal and California state tax landscape. Strict compliance with the tax laws is crucial in this economic framework, and any deviation could invite severe repercussions.
The IRS conducts many audits and criminal tax investigations every year. Once you have been selected for IRS or California state tax audit and have undisclosed foreign accounts and unreported offshore income-generating assets, your options to get yourself back into compliance become extremely limited, and you could end up facing severe civil and even criminal tax penalties and or criminal tax prosecution. This is especially so if your conduct was willful concerning any non-compliance with income tax or foreign information reporting.
Should you find yourself in a situation where you’ve not fully complied with tax-related responsibilities, voluntarily disclosing this can be an essential step toward rectification. Proactively revealing missteps or intentional evasion before an audit or criminal tax investigation begins offers a nearly guaranteed chance to return to compliance and avoid criminal prosecution for tax crimes. It’s important to understand that even if your disclosure doesn’t tick every box, your proactive and prompt action can yield positive results. Throughout this process, adhering to the advice of trusted legal professionals is paramount in effectively navigating this complex terrain.
At the Tax Law Offices of David W. Klasing, our San Francisco Voluntary Disclosure Attorneys and CPAs specialize in navigating the intricacies of both federal and California state voluntary disclosures. This includes domestic and offshore disclosures, CDTFA and FTB voluntary disclosures, streamlined procedures, and procedures for delinquent FBAR and international information return submissions (see below). Taxpayers in San Francisco who have willfully evaded taxes, including not filing foreign information returns and actively avoiding U.S. income tax on foreign income, can generally return to compliance and avoid criminal tax prosecution if they voluntarily disclose their tax non-compliance before the IRS or a relevant California state tax agency initiates an audit or criminal tax investigation. Our team has decades of experience helping clients whose tax returns were false or misleading to correct these issues through the various voluntary disclosure programs offered by the IRS and the state of California.
Types of Voluntary Disclosure
San Francisco taxpayers facing undisclosed income, deductions, credits, or liabilities associated with domestic sources have the option of Domestic Voluntary Disclosure. This method calls for collaboration with the IRS to amend six years of past federal tax oversights. It is crucial first recognize the correct type of voluntary disclosure applicable to your circumstances.
Quiet Disclosure
An unofficial route, Quiet Disclosure, involves the taxpayer amending and re-submitting their returns. While this process includes settling any due taxes, accrued interest, and self-assessed penalties, it doesn’t offer immunity / amnesty from potential severe penalties, including criminal tax charges, if the IRS identifies willful misconduct. Our dual-licensed San Francisco Tax Attorneys and CPAs generally advise this course of action only when the inaccuracies on your return are minor and unintentional because the amended returns themselves can be viewed as a criminal tax admission.
Noisy Disclosure
In more complex or delicate tax cases, our team might suggest a “Noisy Disclosure.” This method is recommended when a substantial amount of additional tax is due, a risk of disqualification exists, or an explicit assurance from the IRS is desired. A noisy disclosure typically involves filing Form 14457 or the Voluntary Disclosure Practice Preclearance Request and Application. The initial step requires taxpayers to provide basic information about their non-compliance. If the IRS grants preclearance, taxpayers proceed to complete a detailed Voluntary Disclosure, which demands a narrative account of non-compliance and the disclosure of any professional advisors involved.
Streamlined Domestic Offshore Procedures: Designed explicitly for U.S. taxpayers residing within the U.S., the Streamlined Domestic Offshore Procedures provide an avenue to correct non-compliance regarding foreign financial assets. This program offers a way to rectify these discrepancies while potentially reducing penalties.
Streamlined Foreign Offshore Procedures: The IRS offers the Streamlined Foreign Offshore Procedures for U.S. taxpayers living abroad. This program helps correct non-compliance related to foreign assets, offering favorable terms that may eliminate penalties.
Delinquent International Information Return Submission Procedures: If you’ve failed to report certain international tax information but owe no additional tax, you may qualify for Delinquent International Information Return Submission Procedures. This pathway allows taxpayers to meet their information reporting obligations without facing penalties.
Delinquent FBAR Submission Procedures: For taxpayers who have not received a contact from the IRS regarding delinquent Foreign Bank and Financial Accounts Reports (FBARs) and are not currently under IRS civil examination or criminal tax investigation, the Delinquent FBAR Submission Procedures offer an avenue to correct their non-compliance.
California States’ Voluntary Disclosure Program?
Like the IRS, the State of California’s Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) provide a method for non-compliant taxpayers in San Francisco to regain compliant status by coming forward with the details of their failure to comply with the California state tax code. The path to voluntary disclosure to the FTB depends on whether you are an in-state or out-of-state filer.
In-State California Voluntary Disclosure Program
For in-state taxpayers, sales tax voluntary disclosure is only available for purchasers within California who are not otherwise required to hold a seller’s permit. It is only used to report and pay the balance of any sales and use taxes that the applicant owes. To qualify for the In-State Voluntary Disclosure Program, all of the following must be true:
- You reside or are located within California and have not previously registered with the CDTFA;
- You have not previously filed an Individual Use Tax Return with the CDTFA;
- You have not reported an amount for use tax on your Individual Income Tax Return filed with the Franchise Tax Board;
- You are not engaged in business in this state as a retailer, as defined in Revenue and Taxation Code section 6015;
- The CDTFA has not contacted you for failure to report the use tax imposed by section 6202 of the Revenue and Taxation Code;
- Your failure to pay the tax or file a return was due to reasonable cause and not as a result of negligence, intentional disregard of the law, or an intent to evade taxes;
- Your purchase is not of a vehicle, vessel, or aircraft, and
- You submit your application voluntarily.
Out-of-State California Voluntary Disclosure Program
The FTB’s Voluntary Disclosure Program provides a method of recourse for out-of-state businesses and their operators to avoid penalties for delinquent or amended filings where honest mistakes prevented their timely compliance.
The state legislature passed expansions to the Voluntary Disclosure Program in 2017, including out-of-state trusts with California beneficiaries and nonresident partners from out-of-state partnerships. The new additions to the program also allow the FTB to waive late filing penalties for specified returns from S corporations and partnerships.
Applications to the FTB must be submitted via mail through form FTB 4935, coupled with the supplementary documentation necessary to explain the nature of the non-compliance. You will not qualify for the program if you have registered with the California Secretary of State, filed a return with the State of California, or received a notice to file a return in California.
Get Back into Tax Compliance without Facing Criminal Tax Prosecution in San Francisco with our dual-licensed Voluntary Disclosure Attorneys and CPAs
At the Tax Law Offices of David W. Klasing, 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. We are not just another legal office in the city; it’s a nexus of federal and California state 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. More profoundly, you’ll find that an even tinier elite group, roughly 3,000, have additionally earned a Master’s in Taxation. David W. Klasing is a proud member of this exclusive elite.
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.
Call us today at (888) 637-7690, contact us online, or reach our San Francisco office directly at (415) 842-2383 for your reduced-rate initial tax consultation.
