Domestic Voluntary Disclosure & the IRS
Domestic Voluntary Disclosure IRS: When a Taxpayer makes a voluntary disclosure to the IRS, the offshore aspect of the submission is the one aspect most people are familiar with. In a very common scenario, a U.S. person will have unreported foreign accounts, assets, investments, and/or income which was not previously reported to the U.S. government. But, the domestic voluntary disclosure program can be equally beneficial to individuals and businesses who are out of compliance with U.S. tax requirements.
We will provide a brief summary of the domestic voluntary disclosure IRS program.
What is a Domestic Voluntary Disclosure?
When a U.S. person is not in compliance for U.S. tax related matters, they have two main options available.
If they are non-willful, they would generally retain a tax lawyer specialist and submit a reasonable cause statement alongside the amended returns (or original returns) and informational returns.
The reasonable cause statement is a detailed legal submission that seeks the avoidance of penalties for various taxes related to the noncompliance. It also avoids the quiet disclosure problem of just submitting prior returns, or filing forward.
When a person cannot certify under penalty of perjury that they are non-willful, they lose the ability to make a reasonable cause statement and should consider a domestic voluntary disclosure.
Because a reasonable cause submission presumes that a person is non-willful.
If a person is willful, then according to the IRS that person could not have acted with reasonable cause. The alternative to reasonable cause is for a person to submit a domestic voluntary disclosure program.
How do I Submit?
In 2019 the Internal Revenue Service updated the form 14457 which was previously used as part of the OVDP submission process.
The new version of the form serves as a standardized pre-clearance letter (and more) for making a domestic or offshore voluntary disclosure submission.
In order to submit to the program a person completes that form and then sends it to the IRS and waits for confirmation that they have been accepted.
Sometimes, it may take several months if not longer for the IRS to respond. That does not necessarily mean anything nefarious is taking place – it is just the IRS’ is way behind.
Common Domestic Voluntary Disclosure Applicants
We have represented numerous clients with a domestic version of the voluntary disclosure program.
Some common examples of represented industries
- Construction industry
- Medical industry
- Entertainment industry
- Finance industry
Do I Qualify for the Program?
Before making a submission to the domestic voluntary disclosure program it is important to speak with experienced counsel in order to evaluate your facts and circumstances.
It is human nature for people to let their mind presume the worst case scenario and that they must have committed a tax crime or other criminal violation – when that just isn’t the case.
We Specialize in Voluntary Disclosure
Our firm specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.