IRS Hates Quiet Disclosures And They Really Mean It

On April 26, 2013 the US Government Accountability Office released a report¹ ("the Report") that encouraged the Internal Revenue Service ("IRS") to seek out off-shore filers who have circumvented the IRS's recent Voluntary Disclosure programs² in favor of "quiet disclosure." While the term quiet disclosure is not a defined term, it is generally understood to mean when a taxpayer: a) files late or amended tax returns outside of the Voluntary Disclosure programs; or b) ignores past tax filing delinquencies and simply becomes compliant prospectively.

The IRS has agreed with the Report's recommendations and, as a result, those taxpayers who have or plan to engage in quiet disclosure likely face significantly increased risk of IRS examination. While typical IRS processes for collecting penalties occur in an orderly and measured fashion, the draconian penalties that can apply for failing to file timely returns are not eligible for these procedural niceties. As a result,