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Each year, countless Federal tax audits are conducted by the IRS. Being selected for a federal tax audit can be stressful, especially if undisclosed foreign accounts and unreported offshore income-generating assets are involved. Suddenly, the path to compliance narrows, and the potential for severe civil and possibly criminal tax penalties, or even criminal tax prosecution, looms large, particularly if the non-compliance is deemed intentional.
Ownership or merely an interest in income-generating offshore assets or businesses overseas means you most likely subject to the IRS’s disclosure requirements for foreign accounts. It’s crucial to understand that as a U.S. tax resident, your worldwide income is taxable in the U.S., and failure to report this income or provide required foreign information reporting can quickly escalate into criminal tax exposure and foreign information reporting penalties. In the best-case scenarios, even in cases of honest mistakes, non-compliance with these requirements often leads to hefty civil penalties.
For those who have neglected to report taxable offshore income or failed to fulfill the required foreign information reporting, considering programs such as the delinquent foreign information reporting program, domestic or ex-pat streamlined voluntary disclosure program, or the government’s comprehensive offshore voluntary disclosure program might be a wise move. These programs are designed to minimize civil penalties and prevent criminal tax prosecution. However, engaging in these or any other penalty reduction strategies should never be done without thorough evaluation and guidance from an experienced dual-licensed International Tax Attorney & CPA.
In the United States, everyone is legally obliged to comply with all federal tax regulations. Our tax system hinges on the principle of “voluntary compliance.” In situations where there has been a lapse in meeting federal tax obligations, whether inadvertent or intentional, voluntary disclosure is a critical step toward rectifying the situation. Proactively revealing past errors or instances of evasion, especially before a tax audit or criminal tax investigation begins, offers a crucial window to return to compliance and prevent criminal prosecution for federal tax crimes. Importantly, even if your disclosure isn’t perfect, promptly and proactively taking corrective steps can yield positive outcomes.
Our team, led by David W. Klasing Esq. CPA M.S.-Tax is a fusion of experienced dual-licensed Tax Attorneys and CPAs who understand the intricacies of dealing with the IRS. With nearly 30 years of practice in federal tax law, David’s broad-ranging experience, leadership in prestigious positions, and continuous pursuit of advanced education have earned him recognition as a stalwart in federal tax law. Whether your concerns pertain to personal or business tax compliance, federal voluntary disclosure programs, or nuanced aspects of domestic and foreign tax laws, our award-winning tax professionals are here to provide tailored guidance.
With our new appointment-only satellite office in Albuquerque, New Mexico, we serve clients across specific locations nationwide, extending our services beyond the typical office confines. Our approach is client-focused and proactive, aiming to prevent avoidable legal tax complications and secure our clients’ allusive priceless peace of mind.
To experience our indispensable support, contact us at (800) 681-1295 or schedule a reduced-rate initial consultation today. As you embark on the journey toward federal tax compliance, remember that you don’t have to navigate these complexities alone – we at the Tax Law Offices of David W. Klasing are here to guide you through every step.
Your Albuquerque Attorneys: The Tax Law Offices of David W. Klasing Start Working for You Today
If you have failed to file a tax return for one or more years or have taken a position on a tax return that could not be supported upon an IRS audit, eggshell audit, reverse eggshell audit, or criminal tax investigation, it is in your best interest to contact an experienced dual-licensed tax defense Attorney CPA to determine your best route back into federal tax compliance without facing criminal prosecution.
Note: As long as a taxpayer that has willfully committed tax crimes (potentially including non-filed foreign information returns coupled with affirmative evasion of U.S. income tax on offshore income) 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.
You must 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 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 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, 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 net worth. See our Testimonials to see what our clients have to say about us!
Understanding the DOJ Tax Division’s Corporate Voluntary Self-Disclosure Policy: Essential Guidelines and Implications
The revised DOJ Tax Division’s Corporate Voluntary Self-Disclosure Policy, as of April 14, 2023, targets various business organizations, excluding sole proprietorships. Sole proprietors, however, can utilize the IRS Voluntary Disclosure Practice to rectify intentional offshore tax non-compliance, potentially reducing hefty civil penalties and potential criminal tax prosecution looming large.
Can I Disclose this to Both the DOJ Tax Division and IRS?
The policy neither mandates nor prohibits exclusivity in making voluntary self-disclosures to the DOJ Tax Division. Hence, you may consider a “belt and suspenders” approach involving voluntary disclosures both to the DOJ and IRS. This strategy ensures comprehensive coverage, with either agency determining the lead in ensuring tax compliance.
What If the Government is Already Aware of My Misconduct?
Disclosing any misconduct is beneficial, even if you think the government might be aware of your tax issue. Though full voluntary self-disclosure benefits may not be available, you can still gain advantages such as reduced penalties and civil and criminal tax consequences from the IRS, including fines, criminal tax prosecution, restitution, and other punitive measures.
What If I Haven’t Met All Disclosure Requirements?
The policy views timely self-disclosures positively, even when they don’t fulfill all the criteria for voluntary self-disclosure. Thus, transparency and cooperation in addressing federal tax non-compliance are emphasized, providing a pathway for organizations to rectify their federal tax filing errors or omissions.
Can I Avoid Criminal Penalties for Past Tax Non-Compliance?
If you uncover past intentional offshore non-compliance, leveraging the expertise of a dual-licensed Attorney CPA to admit to the tax non-compliance can potentially shield you from criminal tax prosecution. To promote taxpayer compliance, even after instances of deliberate non-compliance, the IRS has established a policy that provides certain advantages to individuals who voluntarily disclose their past non-compliant activities. These benefits are extended to those who file accurate returns for the years still open under the criminal statute (typically six years), fully disclose their past acts or omissions of non-compliance, and either pay the total amount due or enter into an approved payment plan.
Note: A civil statute of limitations does not bind federal tax fraud and can be pursued indefinitely. In most cases, federal tax crimes can only be prosecuted within a six-year statute of limitations. However, any deceit related to a tax crime, such as providing false information to a federal agent regarding a past tax return, can constitute the last affirmative act of the crime, potentially making it actionable even after six years have passed. Any current misconduct can trigger a new six-year statute of limitations. Further, all tax returns are submitted under oath, so any misrepresentation could be considered perjury. Moreover, lying to a federal agent is a separate felony offense.
What Conditions Must I Meet for Voluntary Self-Disclosure?
The policy sets detailed conditions similar to the IRS voluntary disclosure practice. To qualify for voluntary disclosure benefits, you must meet criteria including voluntary disclosure, proper timing, preservation of documents, full cooperation, and appropriate remediation.
What If My Disclosure Is Denied as Voluntary?
Given the policy’s discretion in determining whether a disclosure is voluntary, you might question whether you can challenge a denial based on an abuse of discretion. While success in such an appeal might be unlikely, seeking professional advice is crucial to ensure the best outcome.
Can Timing Impact My Voluntary Disclosure?
Your disclosure must occur before any imminent threat of exposure, government investigation, or public knowledge of the misconduct. Prompt action upon discovering misconduct helps retain the benefits the policy offers.
What Should I Include in My Initial Disclosure?
Your disclosure must contain all known facts about the misconduct, even if it’s based on a preliminary investigation or assessment of information. Also, it’s crucial to preserve, collect, and produce relevant documents, cooperate fully with the federal authorities, and demonstrate appropriate remediation.
How Do I Handle a Joint Disclosure to DOJ Tax and IRS?
While joint disclosures may pose potential conflicts, adhering to the criteria for preserving documents, full cooperation, and appropriate remediation can foster a culture of compliance. This approach ensures that both DOJ and IRS are satisfied with the disclosure’s completeness and accuracy.
How Do I Submit My Voluntary Disclosure?
When making a voluntary disclosure to the Tax Division, provide written consent under 26 USC § 6103(c), allowing the IRS to disclose all relevant returns and return information. Submit your request to initiate a voluntary self-disclosure to [email protected].
What If DOJ Tax and IRS Disagree on My Voluntary Disclosure?
If the DOJ Tax approves a voluntary disclosure, but the IRS disagrees and recommends prosecution, this situation may lead to further discussions between the two agencies. Our team at the Tax Law Offices of David W Klasing can help navigate these discussions and ensure the most appropriate action is taken.
How Can the Tax Law Offices of David W. Klasing Help Me?
Our experienced team can guide you through both the DOJ Tax Division’s Corporate Voluntary Self-Disclosure Policy and the IRS Voluntary Disclosure Practice. We assist in navigating these practices, leveraging their benefits, and achieving substantial compliance, thus reducing your risk and ensuring good standing with federal tax authorities.
We are flexible and adapt to your needs. David W. Klasing, an instrument-rated private pilot, can use his Cirrus SR22 to travel for client meetings, eliminating additional travel expenses for you. We are also introducing a new half-day scheduling option. You can hire us for a four-hour slot, during which David W. Klasing will personally travel to any of our appointment-only satellite offices without extra travel charges.
Contact us today. You can reach us by completing our contact form here. If you encounter any difficulties during the online booking process, please do not hesitate to contact our office immediately at (800) 681-1295. We are here to assist you promptly and efficiently.
