Every year, it’s your job and responsibility as a taxpayer to ensure you properly file and pay your taxes to the IRS based on the U.S. Tax Code. This is true even if you file your annual taxes with a tax professional.
However, not everyone properly complies with the tax laws, whether it be accidental or intentional. Due to the significant penalties and punishments that may come about as a result of not properly filing or paying one’s taxes, it’s vital that one meets all of their obligations via a voluntary disclosure as soon as possible.
Even if the IRS hasn’t caught onto your tax non-compliance, making a voluntary disclosure to the IRS is highly recommended. By making a voluntary disclosure in a timely manner, you may be able to avoid tax-related consequences, including prison time.
Here are three requirements involved in making a voluntary disclosure:
1. Accurate information
While one should always remain honest to the IRS in regard to their income, assets, deductions, and the like, if you’ve engaged in tax evasion or fraud in the past, the last thing you’ll want to do is provide inaccurate information on your voluntary disclosure. Rather than lying again, you might as well just not disclose your previous mistakes at all and just face the consequences.
In a voluntary disclosure, it is your responsibility to avoid providing misleading, false, or fraudulent information. Likewise, it’s important to not omit information that is more than a year overdue.
Making a voluntary disclosure to the IRS is your last chance to redeem yourself and move on from your tax mistakes before receiving criminal charges. However, by submitting an incomplete disclosure, the results may not end up in your favor after all, which is why it’s imperative to complete a voluntary disclosure from start to finish.
In order to be considered complete, a taxpayer must agree and follow through with cooperating with the IRS regarding their previous tax errors as well as pay any taxes, interest, and penalties owed. It isn’t until a voluntary disclosure is complete that a taxpayer will be considered satisfied with the IRS and exempt from tax-related criminal punishment.
3. Filed within the disclosure period
As of 2018, the disclosure period for making a voluntary disclosure was reduced from eight years to six years. That said, it’s suggested to make a disclosure with the IRS now rather than waiting until a later time. In some cases, however, taxpayers may have an extended timeframe to make a voluntary disclosure.
Are you out of U.S. tax compliance? Make sure to submit a voluntary disclosure to the IRS as soon as possible. If you need help with the process, contact Travis W. Watkins Tax Resolution & Accounting Firm.
Whether you botched one tax return in the past year or several over many years, it’s critical that you make a voluntary disclosure to amend previous returns or file undisclosed income, assets, or accounts. Voluntarily, accurately, and completely making a disclosure within the disclosure period, you can potentially avoid serious consequences.