Taxpayers who discover unreported foreign income, assets, or accounts often face an important decision: whether to use the IRS Voluntary Disclosure Program or the Streamlined Filing Compliance Procedures. Choosing the wrong program can significantly increase penalties and risk.

This guide compares the Voluntary Disclosure Program and the Streamlined procedures to help taxpayers understand which option may be appropriate based on their specific facts.

Overview of the IRS Voluntary Disclosure Program

The Voluntary Disclosure Program is designed for taxpayers whose non-compliance may have been willful or involved significant risk. While the program requires extensive disclosure and cooperation, it can help mitigate criminal exposure.

Overview of the Streamlined Filing Compliance Procedures

The Streamlined program is intended for taxpayers whose non-compliance was non-willful. It allows eligible taxpayers to correct filings with reduced penalties when certification requirements are met.

Willful vs Non-Willful Conduct

Determining whether conduct is willful or non-willful is one of the most critical aspects of choosing a disclosure path. This determination requires careful analysis of facts, intent, and taxpayer behavior.

Key Differences Between Voluntary Disclosure and Streamlined

The Voluntary Disclosure Program involves higher penalties and more extensive disclosure but offers greater protection from criminal prosecution. The Streamlined program offers reduced penalties but requires certification of non-willfulness.

Risks of Choosing the Wrong Program

Selecting the wrong program may result in rejection, increased penalties, or exposure to enforcement actions. Quiet disclosures are especially risky and generally discouraged.

Factors to Consider When Choosing a Program

Factors include the nature of the non-compliance, taxpayer knowledge, prior professional advice, size of unreported assets, and overall risk tolerance.

Why Professional Guidance Is Essential

Program selection involves legal, factual, and strategic considerations. Professional guidance helps ensure the correct path is chosen and executed properly.

What Happens After Disclosure

After disclosure, taxpayers may face examination, penalty assessments, or closing agreements depending on the program used. Proper representation helps navigate this process.