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Voluntary Disclosure Practice

Experienced Tax Crimes Attorneys in Orlando

On November 20, 2018 the IRS updated its Voluntary Disclosure Practice (VDP) and released the update on November 29, 2018. According to the IRS “The objective of the voluntary disclosure practice is to provide taxpayers concerned that their conduct is willful or fraudulent and that may rise to the level of tax and tax-related criminal acts, with means to come into compliance with the law and potentially avoid criminal prosecution."

The potential benefit of avoiding criminal prosecution and reducing civil penalties cannot be overstated.

Contact us at (407) 901-5852 to speak with one of our legal professionals to find out if you qualify for the updated VDP.

How Do I Enter VDP?

In order to enter the VDP, a person must first submit a preclearance request to Criminal Investigation (CI), the criminal law enforcement arm of the IRS. CI special agents will examine the preclearance request as well as IRS’ own records and, if appropriate, CI will grant a tentative preclearance request.

The preclearance request will be denied if any of the following exists:

  • The person is currently under a civil IRS audit.
  • The person is under an IRS criminal investigation.
  • The income is from an illegal source, such as drug dealing, fraud, bank fraud or any other criminal conduct.

The preclearance submission must also include the disclosure of funds, circumstances, assets, related parties and any professional advisors involved in the noncompliance with tax laws.

VDP & Your Assets

The VDP also applies to non-disclosed offshore accounts and assets. The civil penalty provisions allow for civil penalties at the discretion of the IRS. The offshore civil penalties are, however, subject to negotiation and can be reviewed by Office of Appeals, a separate section of the IRS. The VDP allows discretion in the offshore penalty which can be 50% of the highest value of the offshore accounts each year of the 6 years that the VDP require the filing of corrected returns.

Why You Should Consider VDP

While civil penalties can be significant, the ability to avoid criminal charges and long terms in prison is significant. The VDP, if successfully completed, is a course of action which needs to be carefully considered.

Efforts of the IRS and Department of Justice to discover unreported offshore accounts, income, and assets is continuing and increasing. The potential of the IRS discovering offshore accounts and opening a criminal investigation or civil audit, should result in early and careful consideration of the VDP. If the IRS discovers the unreported offshore accounts and opens a civil audit or criminal investigation, the opportunity to avoid criminal prosecution through the VDP is lost.

Reasons that IRS criminal investigations are opened include:

  • Audits by IRS civil agents.
  • Employees or co-owners of businesses reporting fraudulent conduct to the IRS such as a business owner skimming cash or falsely overstating expenses.
  • Disgruntled spouses or relatives reporting offshore accounts, skimming business receipts, or taking false deductions.
  • IRS special investigations into industries or organizations that are perceived to foster tax fraud
  • Large amounts of cash being deposited into U.S. banks that cause a bank to file currency transaction reports or suspicious activity reports with the U.S. Treasury Department.

These as well as other reasons can result in the opening of an investigation by IRS criminal agents or a civil IRS audit, both of which exclude participation in the VDP. Anyone concerned about the potential of a criminal IRS case and who wants to get straight with the IRS thereby avoiding prosecution and prison should act quickly.

Call (407) 901-5852 to schedule a free consultation with an Orlando tax crimes attorney.

What Are the Benefits of VDP?

The advantages of entering the VDP also involves reduced civil penalties. For example, in a case of civil fraud, the IRS will impose a 75% penalty of the unpaid tax for each year where fraud is present. Under the VDP, a person must complete and submit corrected tax returns, but only for the previous 6 years.

It is not unusual in a civil audit, in which fraud is discovered, for the examiner to go back beyond 6 years. Without the VDP, the IRS can go back more than 6 years and impose the 75% fraud penalty for every year. Under the VDP there is only one 75% civil fraud penalty assessed. The assessment will be imposed on the year in which there is the highest tax liability, not on each of the 6 years considered under the VDP. Therefore, the benefit of successfully completing the VDP is not only to avoid criminal prosecution but also to reduce the amount of the civil fraud penalty.

If eligible to enter the VDP, one must cooperate fully with the civil audit. With full cooperation and the reaching of an agreement as to the tax liability, the matter can be resolved, and the person is able to move on without fear of criminal prosecution. Full and open cooperation is important in order to ensure that the case is not referred back to the criminal investigators.

Consult with a Tax Crime Defense Lawyer Today

The opportunity offered by the VDP is significant but not without risks. There is the potential that without an agreement and cooperation, the civil agent may refer the matter back to the IRS criminal investigators.

We have represented many people with offshore accounts who successfully completed the Offshore Voluntary Disclosure Program (OVDP) and avoided criminal prosecution. The OVDP ended in September 2018. We can help you through the VDP.

It is important that you contact us quickly so that we can help you to enter and successfully complete all the requirements of the updated VDP and avoid a criminal prosecution.

Contact our law firm to request your free case consultation with an experienced tax lawyer in Orlando.

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