Kostelanetz partner Michael Sardar was quoted in Tax Notes regarding issues with the IRS voluntary disclosure program for owners of foreign assets.
The Tax Notes article by Nathan Richman is a deep dive into numerous taxpayer concerns with the Internal Revenue Service’s voluntary disclosure program (VDP). In the article, Michael noted that the requirements of the IRS program can present some taxpayers with a “Catch-22” situation that leaves them open to criminal prosecution.
Per the article:
“According to Sardar, the [VDP’s] willfulness statement requirement — whether by the checkbox or in some other form — can present taxpayers whose actions aren’t clearly willful or clearly non-willful with a “Catch-22” situation: Stay out in the cold and risk tax prosecution or come in and risk committing perjury by attesting to willfulness despite disagreeing on that point. While the IRS might be unlikely to pursue a perjury case based on a voluntary disclosure, such a worry is another barrier to entry for the voluntary disclosure practice, he said.
Sardar said that he’s less concerned about the program’s strict penalty structure than he is about the IRS’ focus on getting an admission or avowal of willfulness. He asked why the IRS should turn away taxpayers wanting to come into compliance– assuming they are willing to pay the monetary price– just because those taxpayers think they might not have acted willfully.”
Tax Notes subscribers can read the full article here.
