IRS Voluntary Disclosure Program and Who Can Apply For It?
The IRS Voluntary Disclosure Program, is intended to assist taxpayers in resolving past tax liabilities. Individuals and Businesses who disagree with the town’s tax laws are encouraged to come forward and report and pay any outstanding tax debts. The programme is both confidential and voluntary, and it only applies if the Department of the liability has not contacted you.
What it does
You will have approximately 30 days after the VDA is executed to report and pay the amount of tax determined to be due. Any tax periods included in a VDA are subject to audit by the Department. If you make any false statements to the Department, the VDA will be null and void.
You’ll be the one responsible for paying all the taxes that you owe and any interest (in part or in full) resulting from your corrections. If the CRA accepts your application which is submitted, you will be granted prosecution relief, as well as partial penalty interest and penalty relief that you would have had to pay otherwise.
Most people usually file and pay their taxes in full and on time, so it’s critical that the VDP relief is equitable and doesn’t reward people or businesses who try to avoid paying their fair share of taxes.
To be fair to everyone, the CRA gives those who are correcting an unintentional error a higher level of relief than those who have purposefully avoided paying their taxes.
Who can apply?
The irs voluntary disclosure program receives a lot of applications from a wide range of taxpayers and registrants seeking to correct a variety of tax issues. Here are a few examples. If you find yourself in this kind of situation, you should consider taking advantage of the program’s advantages:
- A previous year’s tax return was not filed, and it is now past due.
- On a previously filed tax return, income was not reported or was under-reported.
- Expenses that were not eligible for reimbursement were claimed on a tax return.
- Income from foreign sources that is taxable in Canada was not included on a previously filed tax return.
- For any reporting period, no GST/HST was charged, collected, or reported.
Conclusion
The Department which handles this will waive any penalties associated with the disclosed tax liability as an incentive for voluntary disclosure. The terms for paying and reporting the tax are spelt out in the Voluntary Disclosure Agreement (VDA), a standard written agreement signed by both parties.
