A revised version of Form 14457, Voluntary Disclosure Practice Preclearance Request and Application PDF was released today by the Internal Revenue Service, which included the addition of a section on reporting virtual currency.
Form 14457 allows taxpayers who are at risk of criminal prosecution for willful violation of tax law to voluntarily disclose information to the Internal Revenue Service that they had previously failed to disclose to the agency.
The following changes and additions have been made to this form:
Photocopies, facsimiles, and scans of taxpayer signatures are now accepted by the Internal Revenue Service’s Criminal Investigation division. If possible, taxpayers should send this form via eFax to the following number: 844-253-5613, which will reduce mailing and processing times. Previously, Part II of this form had to be mailed to the address on the form.
A new section has been added for reporting virtual currency.
A penalty mechanism for employment tax, as well as difficulties of inheritance and gift planning.
Inability to pay in full is indicated by a checkbox.
The updates are based on feedback from practitioners and other stakeholders, and they take into account changes in the types of financial assets that taxpayers hold in their possession.
In the words of Doug O’Donnell, Deputy Commissioner for Services and Enforcement, “This is an important form and process for people who recognize that it is better to come forward and address their tax situations head-on before facing IRS enforcement action.”
“A number of updates have been made to the revised form, and we encourage people to review the guidelines and consult with a trusted tax professional before using it.”
Since its introduction, thousands of taxpayers have taken advantage of the Voluntary Disclosure Practice. The program is designed to provide a compliance option for taxpayers who are at risk of criminal prosecution and who wish to become compliant with tax laws.
Those who make such disclosures are nevertheless subject to civil investigation and are required to pay all appropriate taxes, interest, and penalties on top of their regular income.
People who did not commit any tax-related crimes but who seek to repair mistakes or file tardy returns should investigate the numerous choices available to them to meet their tax and reporting responsibilities.
To determine which choice is the most appropriate for their situation, the IRS recommends that people speak with a competent tax or legal advisors.
The voluntary disclosure made by a taxpayer must be made in a timely manner, be correct, and be full. It is also necessary for the taxpayer to cooperate with the Internal Revenue Service in assessing the right tax liability, as well as to make full payment of the tax, interest, and any relevant penalties.
Tax, interest, and penalties must be paid in full as part of the cooperation agreement. The IRS may explore alternative payment arrangements on behalf of a taxpayer who is unable to make the full amount due on time.
It is necessary for a taxpayer to indicate that they expect they will be unable to pay the total amount of tax, interest, and penalties that are due, as well as to submit a proposed payment arrangement as well as a completed and signed Collection Information Statement (Form 433-A).
When establishing incapacity to pay, the taxpayer must demonstrate that he or she has done so to the satisfaction of the IRS by providing a complete disclosure of all assets and income, both domestic and foreign, within the person’s control.
If you would like more information on the Voluntary Disclosure Practice, as well as alternative options for bringing your business into conformity with the law, please see the following website: