Tax Compliance, Voluntary Disclosure and Litigation

Tax Compliance, Voluntary Disclosure & Litigation

The U.S. tax law provides very strict tax compliance deadlines. Various federal and state tax returns become due throughout the year. The penalties for failure to file can be harsh and get progressively worse when certain forms are not filed or when tax is not paid.

When a taxpayer has outstanding obligations from prior years, it is best to get back into compliance on a voluntary basis.

In other cases, when a dispute develops, litigation may become necessary.

Over the past 25 years, I have been assisting clients with their outstanding tax matters and representing them before the IRS and various states when audited.

Historically the 3 three options available for taxpayers who have not maintained strict compliance are:

  • Delinquent filing procedures – These are meant for those taxpayers who have reasonable cause in their failure to file. If the delinquent filing is accepted, there is no penalty added to the unreported income.
  • Streamline filing program – Meant for taxpayers who are non-willful in their failure to file. Generally, those who were unaware of a requirement at the time they received the income. Streamline has a 5% penalty and a look back period of 3 years. (Deals with foreign income and investments.)
  • Offshore Voluntary Disclosure Program (OVDP) – (No longer available) OVDP was created in response to U.S. taxpayers with foreign accounts who did not claim those foreign accounts on their U.S. returns. The steepest penalties were included with OVDP at rates of an additional 27.5% to 50% of the taxes owed. OVDP looked back over the last 7 years of unreported income. (Deals with foreign income and investments.)