maybe a better question: is the irs trying to make it not work?
by 卡塔尔世界杯常规比赛时间 research
for more than two decades, the irs has been allowing tax dodgers to admit their delinquency and pay their back taxes, interest and penalties without fear of criminal prosecution. reaping the revenues was preferred over locking people up.
but times have changed.
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this act of grace is called the voluntary disclosure practice (vdp). the purpose is to induce the intentionally noncompliant to come forth with what they owe and come back into the fold of patriots who support their nation. in essence, the vdp is an escape hatch out of the crime of tax evasion.
the vdp option has been working reasonably well, but recent changes may be discouraging, rather than encouraging, delinquents to go straight.
no particular format
the vdp option is available only to those who are not already on the irs’s radar for tax evasion. it’s also unavailable in cases involving illegal income.
in the past, vdp procedures have been somewhat informal. there’s no particular format for communications as long as communication is truthful, timely and complete as both parties work toward good faith arrangements to pay back taxes plus interest and penalties. vdp requirements could be satisfied by a qualified amended return. the civil fraud penalty is a little stiff – 75 percent on the year of highest tax liability – but it beats going to jail.
there are several requirements for being accepted for vdp. it starts with part i of the pre-clearance request, form 14457, which is sent to the irs criminal investigation department. if ci determines that the taxpayer qualifies, the taxpayer can submit part i.
if the applicant fails to meet any of several requirements, such as responding to all document requests, the irs can withdraw the pre-clearance agreement.
the rub
but here’s the rub. since june 2024, taxpayers must explicitly, under penalty of perjury, indicate that they were willful in their noncompliance.
in other words, they have to admit to committing a felony. in court, it could be tantamount to a guilty plea. they do so by simply checking a little box.
form 14457 does not define “willful,” and it provides no assurance or expectation that the applicant will be cleared for a vdp. nor does it say whether the taxpayer is admitting to the willfulness standard of a civil or criminal suit.
in other words, to be exonerated, the taxpayer must first admit guilt, and then wait to see if the confession leads to exoneration or prosecution.
one can’t blame a tax dodger for seeing too much risk in checking the little guilty box. many may feel safer remaining outside the law.
to quote national taxpayer advocate erin m. collins, who is concerned about this problem, “when taxpayers perceive penalties for noncompliance as too severe, they may not come forward, thus creating a paradox where taxpayers are so fearful of the consequences that they may avoid coming into compliance altogether.”
compliant taxpayers pay 85 percent of all the federal taxes due. the other 15 percent account for a “tax gap” which, if closed, could bring $696 billion into the u.s. treasury.
so which would be more satisfying: tax dodgers behind bars or hundreds of billions of dollars added to the treasury?