Is there such a thing as tax amnesty and how do I apply for it?
The Internal Revenue Service does not have a formal amnesty program. There is, however, an internal Voluntary Disclosure Policy. Under this policy, the Internal Revenue Service will typically forego criminal prosecution in cases where a taxpayer voluntarily comes forward, prior to the initiation of a criminal investigation, and voluntarily discloses the error or deficiency. The Taxpayer must then make an effort to pay whatever taxes, penalties and/or interest owed. This policy was designed to bring taxpayers into compliance, while at the same time avoiding criminal prosecution. It is not a mechanism for the reduction or elimination of income taxes, interest, and most civil penalties owed.
Voluntary Disclosure is not an official policy of the Internal Revenue Service. Thus, the Service claims that it is not bound by this initiative. Nevertheless, the Voluntary Disclosure policy was recently updated and expanded to encourage taxpayers who avoided the payment of income taxes through the use of overseas corporations, bank accounts and credit card accounts to voluntarily come into compliance.
Unlike the federal government, state taxing authorities, such as the Michigan Department of Treasury, will occasionally offer a tax amnesty program. These programs are designed to encourage taxpayers to come forward voluntarily, and become current with their tax liabilities without the threat of criminal prosecution. In certain circumstances state taxing authorities may provide for a reduction in penalties and interest for those who voluntarily come forward. The criteria required for these programs, however, vary from state to state and are subject to availability through changes in the law.
If you believe that one of these programs may be right for you, you should immediately consult with an experienced tax attorney. Both the timing and the approach taken are crucial to best ensure that you qualify for the applicable amnesty program. Protect your assets and your rights by contacting the Law Offices of Jeffrey S. Freeman. Contact us for a free consultation.
