Domestic and Offshore Voluntary Disclosure Ineligibility Examples
In an earlier article, I discussed the general Offshore Voluntary Disclosure Program eligibility requirements now closed, particularly those spelled out in the Internal Revenue Manual (IRM). In this essay, I would like to provide certain examples of when a taxpayer’s disclosure fails to meet IRM 9.5.11.9 requirements. Note, these examples are not specific to offshore disclosure, but are also relevant to domestic voluntary disclosure. Finally, it is important to point out that the examples below are not taking into account other OVDP application requirements; rather, they merely describe general compliance situations.
It should be noted that these examples are for illustrative purposes only and cannot be relied upon to determine the voluntary disclosure eligibility in your specific circumstances. Whether you are eligible to participate in the OVDP is a question that must be analyzed by an international tax attorney who is experienced in this area of law.
1. A letter from an attorney stating his client, who wishes to remain anonymous, wants to resolve his tax liability. This is not a voluntary disclosure until the identity of the taxpayer is disclosed and all of the elements of IRM 9.5.11.9 have been met.
2. A disclosure made by a taxpayer who is under grand jury investigation. This is not a voluntary disclosure because the taxpayer is already under criminal investigation. The conclusion would be the same whether or not the taxpayer knew of the grand jury investigation.
3. A disclosure made by a taxpayer, who is not currently under examination or investigation, of omitted gross receipts from a partnership, whose partner is already under investigation for omitted income that was skimmed from the partnership. This is not a voluntary disclosure because the IRS has already initiated an investigation which is directly related to the specific liability of this taxpayer. The conclusion would be the same whether or not the taxpayer knew of the ongoing investigation.
4. A disclosure made by a taxpayer, who is not currently under examination or investigation, of omitted constructive dividends received from a corporation which is currently under examination. This is not a voluntary disclosure because the IRS has already initiated an examination which is directly related to the specific liability of this taxpayer. The conclusion would be the same whether or not the taxpayer knew of the ongoing examination.
5. A disclosure made by a taxpayer after an employee has contacted the IRS regarding the taxpayer’s double set of books. This is not a voluntary disclosure even if no examination or investigation has commenced because the IRS has already been informed by the third party of the specific taxpayer’s noncompliance. The conclusion would be the same whether or not the taxpayer knew of the informant’s contact with the IRS.
Contact Sherayzen Law Office for Legal Help With Your Domestic and Offshore Voluntary Disclosure
If you have undisclosed income and/or offshore accounts, contact Sherayzen Law Office for legal help. Our experienced tax firm will analyze your case, determine your current tax liability (including potential FBAR penalties), identify available voluntary disclosure options, prepare all of the necessary legal and tax documents, and rigorously represent your interests during your negotiations with the IRS.