IRS VOLUNTARY DISCLOSURE PRACTICE
This page focuses on the IRS Voluntary Disclosure Practice (“VDP”) – a voluntary disclosure option that focuses mostly on willful taxpayers (although, it may be useful for certain non-willful taxpayers as well).
What is Voluntary Disclosure Practice?
The IRS Voluntary Disclosure Practice is a longstanding practice of IRS Criminal Investigation (CI) that has existed since 1946, but its current format was created in September of 2018. It is a voluntary disclosure option that may be used by willful taxpayers to limit their exposure to criminal and willful civil penalties related to their domestic and US international tax noncompliance, including willful failure to file accurate information returns such as FBAR, Form 8938, Form 5471, Form 8621, Form 3520, Form 926 and other related US international tax forms.
Who Can Use Voluntary Disclosure Practice?
While any US taxpayer can enter the VDP as long as the eligibility requirements are met, it is recommended that this option is used mostly by taxpayers who willfully violated their US domestic and/or international tax obligations. In certain circumstances, non-willful taxpayers who fail to qualify for other voluntary disclosure options (such Streamlined Domestic Offshore Procedures and Streamlined Foreign Offshore Procedures) may find it useful to use Voluntary Disclosure Practice.
Would Entering Voluntary Disclosure Practice Help Me Avoid Criminal Prosecution?
While this is not automatic or guaranteed, VDP participation would generally result in criminal prosecution NOT being recommended. In other words, save for exceptional circumstances (usually involving failure to cooperate during your voluntary disclosure), VDP helps willful taxpayers avoid IRS criminal prosecution.
Can I Use Voluntary Disclosure Practice to Settle My Prior Cryptocurrency Tax Noncompliance?
Yes, Form 14457 (the VDP Preclearance Request) specially covers virtual currency tax noncompliance.
Who Can Help Me Understand, Prepare and File My Voluntary Disclosure Package Under the IRS Voluntary Disclosure Practice?
You should contact the experienced international tax firm of Sherayzen Law Office. International tax attorney Eugene Sherayzen and his team will help you understand the Voluntary Disclosure Practice, evaluate whether this option is right for you, help you apply for acceptance into the Voluntary Disclosure Practice, prepare and file all of the required legal and tax documents, and defend your legal position during the VDP examination process.