A process run by Criminal Investigation
The IRS voluntary disclosure practice is administered by IRS Criminal Investigation, and it is meant for people whose noncompliance may have been willful and who want to address potential criminal exposure. It generally begins with a preclearance request, which lets CI check whether you are eligible before you disclose details. If you are cleared, a fuller submission follows, describing the noncompliance, the people and entities involved, and the income or assets at issue. Accepted cases then move to the civil side of the IRS, where the returns filed for the disclosure period are reviewed and the tax, interest, and penalties are settled. The program does not grant immunity, but a timely, complete, and truthful disclosure is weighed heavily when the government decides whether to prosecute.
Timeliness and what participation requires
Eligibility depends heavily on timing. A disclosure generally has to come before the IRS has started an examination or investigation of you, and before it has received information about your noncompliance from another source, such as a whistleblower or a foreign bank. Income from illegal activity is generally excluded from the program. Participants are expected to cooperate fully and to pay what is owed, including the civil penalties the program applies, or make arrangements to do so. The terms have been revised over time, so the version in effect when you apply is the one that matters.
Deciding whether this program is the right vehicle
Not everyone with a past problem belongs in it. If the conduct was not willful, other IRS procedures with lower penalties may fit, but certifying non-willfulness when the facts point the other way creates its own risk. Before any request goes in, your lawyer needs a full picture of the years, the accounts, and who knew what, gathered in a privileged way and often with an accountant retained through counsel. Our first task is to learn whether anyone has already contacted you and what the evidence of intent looks like, and then to judge whether the formal program or a different path makes more sense.
