Taxpayers who have filed erroneous returns or who have failed to file at all may seek to rectify their noncompliance through a “Quiet Disclosure.” A Quiet Disclosure occurs when the taxpayer simply files the previously unfiled or amends the previously filed but incorrect returns. Filing returns in such a manner may bring a taxpayer back into compliance while avoiding the penalty framework and audit process associated with the formal Voluntary Disclosure Program, but a Quiet Disclosure is not without serious risk.
The IRS does not formally encourage Quiet Disclosure. Rather, the IRS prefers noncompliant taxpayers to submit delinquent or amended returns through the Voluntary Disclosure Program and accept the Voluntary Disclosure penalty framework associated with coming into compliance. Returns filed through Quiet Disclosure are not offered the protections that the formal Voluntary Disclosure provides. They are not insulated from criminal prosecution and, if the IRS examines the returns, they may be subject to substantially higher penalties. In addition, late-filed and amended returns are often subjected to increased scrutiny, particularly where there is an increase in tax liability, foreign income or assets, or other items considered high-priority enforcement areas.
If you have unfiled returns or if you previously filed returns that you know are incorrect, the attorneys and Certified Public Accountants of Daniel Rosefelt & Associates, LLC, can help you navigate your legal options and determine the best course of action. Contact us at (301) 656-4424 or reach out by completing our ten-second contact form to know your real options.