If you have engaged in tax evasion or other willful noncompliance, the IRS Criminal Investigation Voluntary Disclosure Practice (IRS-CI VDP) may provide a narrow window to mitigate the consequences. The program offers taxpayers an opportunity to disclose misconduct before the IRS initiates an audit or investigation, potentially reducing penalties and limiting criminal exposure.
The VDP is a program that provides a means to come in from the cold if you have willfully skirted tax compliance or engaged in tax crime. In the past, the IRS has maintained a robust prosecutorial interest in pursuing taxpayers after initiating an investigation. If you are not yet at that point with the IRS, it may be worth a look to consider the VDP.
What’s in it for you?
Fundamentally, the VDP may help you better the outcome of your legal circumstances, compared to what could happen if you are prosecuted by the IRS. To those who are eligible, successful completion of the VDP can work to reduce the fines you will be assessed. Importantly, full disclosure of your activities may help you avoid or diminish criminal or tax fraud charges that would otherwise be filed. With reduced or deterred charges, the likelihood of a prison sentence may also be reduced.
In addition, when using the VDP, you may have a seat at the table regarding the terms for payment of money you will owe the IRS as a result of the disclosure.
Caveat emptor
It should go without saying that if you are considering the VDP and have been engaged in illicit tax schemes or failure to pay, you should speak with an experienced criminal tax attorney before you apply to the VDP. Your attorney can fully review your situation, offer straightforward feedback, and assist you—whether you move forward with the disclosure or not.
Realities of the VDP
The program is not for taxpayers with illegal sources of income—but for taxpayers who may have engaged in tax-related criminal behaviors. Voluntary disclosure requires complete honesty regarding your activities and noncompliance.
The VDP Form requires detailed information on your accounts, transactions and those involved. The form was recently revised to remove a checkbox that required the user to check off that they willfully admitted to noncompliance.
If the IRS already has information on your tax crime, or has already initiated a civil audit or criminal investigation, you are not eligible for the VDP. Also, if the IRS has been tipped off to your tax situation, you will not be eligible.
Exercise caution and work with your tax attorney regarding your decision and follow-through with the VDP. Your legal counsel can work directly with the IRS by providing information, responding to queries, and crafting the best result for your circumstances.
Is the VDP for you? It depends. Do your homework to find out—before you connect with the IRS.
Looking for experienced legal advice on criminal tax allegations? We can help
The VDP is not a guarantee of immunity, nor is it available once the IRS is already pursuing your case. It is a highly technical program that requires full disclosure, careful timing, and skilled legal navigation. At Robert J. Fedor, Esq., L.L.C., we provide strong legal representation with the experience to advise you on options to help you avoid or deal with criminal charges. Contact our legal team today at 440-250-9709. We serve clients. internationally and Northeast Ohio, Chicago, and New York City from our offices in Cleveland and Chicago.
For more information on criminal tax fraud, improve your grasp of tax crime by downloading our free eBook, Understanding Tax Fraud, today.
