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While the IRS has promulgated many options for taxpayers to become compliant with their IRS tax and reporting requirements, including Voluntary Disclosure and Streamlined Procedures, another option that may, in certain cases, be a reasonable alternative is “filing quietly” or a “quiet disclosure.” Although the IRS officially looks down on a quiet disclosure, there are certain instances where it may make sense for a taxpayer. The Voluntary Disclosure is meant for taxpayers with serious criminal exposure, and the penalties are extremely harsh. The Streamlined Procedure has certain requirements that must be met, and the taxpayer must include a certified statement of their facts and circumstances which illustrate that they were non-willful. There are times when a taxpayer either doesn’t need to, or may not do a Voluntary Disclosure or a Streamlined filing. In those instances, a quiet disclosure is an alternative to consider.
What is a Quiet Disclosure?
A quiet disclosure is when a taxpayer either amends their tax returns, typically going back 6 years, to correct them (which could include reporting foreign bank accounts or correcting income or deductions) or files delinquent tax returns, also typically going back 6 years, without going through one of the IRS’ official programs or procedures. The amended or delinquent returns are simply filed in the ordinary course. A “reasonable cause statement” may or may not be included. And then you wait.
The IRS has several years to audit your tax returns and assess penalties. Sometimes the penalties are assessed quickly by the IRS computer system. They may or may not audit the tax returns. If penalties are assessed, the taxpayer can strategize with her tax attorney whether or not to appeal them and try to get them abated. Once all of the taxes and penalties have been assessed, the taxpayer may need to work out a collection alternative with the IRS – either an installment payment plan or an Offer in Compromise.
Conclusion
If a taxpayer needs to file delinquent tax returns, amend tax returns or report offshore accounts to the IRS, there are many alternatives. In certain situations, filing quietly may be a reasonable option, however there are risks involved. This is an important decision that requires the advice of tax attorneys with experience in this area. Please get in touch with the team at Weisberg Kainen Mark to discuss your options. Every taxpayer is different, and there isn’t always a “right” or “wrong” decision. Call us at 305-374-5544 to get started with a consultation.
Weisberg Kainen Mark, PL
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