What Is a Voluntary Disclosure Program?

You can voluntarily disclose a tax deficiency to a tax department before they discover the issue or audit your file. Depending on the taxing authority, the program may be available for federal, state or local tax compliance (e.g., payroll, income, sales and use tax).


IRS Voluntary Disclosure Program Tax Compliance | www.deductingtherightway.com


Product Recommendation: Get ready for your taxes with QuickBooks SE (up to 50% off), QuickBooks OnlineQuickBooks Payroll, QuickBooks Checks and Supplies (15% off + free shipping)

[We may earn a commission or referral fee when you click on the links appearing in this post. Read full disclosure].

Why would I voluntarily disclose information?

If you let the tax agency catch your error or omission, and it's a willful failure to comply with their tax laws, you may be subject to hefty penalties, interest, and jail time. By coming forward voluntarily before they discover the issue, you are likely to get a more favorable result.

READ MORE: IRS Statistics Exposed in the Latest Data Tables

What can I report to the tax department?

The voluntary disclosure of tax issues may include unfiled tax returns, back taxes, under-reporting income, or over-inflating tax deductions. You must reference your state's rules for details.

TIP: To use the IRS Voluntary Disclosure Program, your tax problems must rise to criminal activity. Visit How To Make a Domestic Voluntary Disclosure and Revised IRS Voluntary Disclosure Practice.
 

What happens when I report myself?

You or your representative must provide detailed information about your tax situation, including the tax year and issue. If your tax disclosure letter or form meets the agency's guidelines, they may establish a disclosure agreement or statement for you to sign. You must comply with all the terms to avoid complications.

Participating Tax Agencies by State

Alabama
Alaska
Arizona
Arkansas
California (In-state)
California (Out-of-state)
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

READ MORE: 3 Ways to Avoid an IRS Audit



DISCLAIMER: Please consult with your accountant, attorney, and financial advisor before implementing any information displayed on this website. DIY research does not replace the advice of a licensed professional who has thoroughly reviewed your file.