Voluntary Disclosure Tax Amnesty

Voluntary Disclosure Tax Amnesty: There are several Voluntary Disclosure Tax Amnesty options for Taxpayers. Both the IRS and state government agencies have tax amnesty programs  in place — along with other voluntary disclosure programs outside the United States in countries such as Italy.

In general, tax amnesty refers to the process of voluntarily getting into compliance for unreported income an undisclosed accounts & assets.

Depending on the nature and extent of the underlying noncompliance, the matter maybe domestic, foreign, or a hybrid of both.

In recent years, voluntary disclosure tax amnesty for offshore related matters – especially foreign accounts compliance has become a key enforcement priority.

By submitting to the IRS voluntary disclosure tax amnesty program, a taxpayer can usually avoid a criminal probe, an Internal Revenue Service special agent investigation and/or criminal prosecution for offshore or domestic related issues.

We will summarize 2020 IRS Amnesty, along with recent changes in voluntary disclosure tax compliance.

What are the Different Types of Amnesty Programs

Voluntary disclosure tax amnesty can be broken down into two main subsections:

  • Domestic Voluntary Disclosure Tax Amnesty; and
  • Offshore Voluntary Disclosure Tax Amnesty
IRS Amnesty: Changes in Voluntary Disclosure Tax Compliance

IRS Amnesty: Changes in Voluntary Disclosure Tax Compliance

Domestic Voluntary Disclosure Tax Amnesty

With domestic voluntary disclosure tax amnesty, a person is seeking to get into IRS compliance for domestic tax issues.

Generally, this will involve issues such as unreported income, overstated deductions, and/or falsifying businesses that may not exist. When it involves businesses, it may also include employment tax, sales tax, and other tax related issues, including withholding.

In recent years, a common issue has become high-income earners being goaded on by unethical tax practitioners to create false businesses in order to claim phantom deductions that never existed, and artificially reducing the taxpayer’s tax liability.

Offshore Voluntary Disclosure Tax Amnesty

Offshore voluntary disclosure tax amnesty typically refers to the non-reporting for prior year offshore, accounts, assets, investments and income.

When it comes to the Internal Revenue Service, there are many different avenues available to the taxpayer depending on whether they willful or non-willful, and whether or not they filed timely tax returns or not.

Since the inception of voluntary disclosure the IRS has been steadily increasing the penalty when it comes to offshore voluntary disclosure tax amnesty programs – and the Internal Revenue Service has stated — as recent as late 2019 — that the service is considering terminating some of the more popular voluntary disclosure tax amnesty programs, such as the Streamlined Offshore Program.

Government organizations can modify, change or cease voluntary disclosure tax amnesty – and generally they do not have to provide any specific time frame.

Therefore, If you are considering getting into compliance, you should speak with experience counsel.

Golding & Golding: About our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure

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