Voluntary Disclosure Agreements

[Gary Massey]

Eric, I just listed to your recording on non-filers, where you go into Voluntary Disclosure Agreements.

Is Volunatry Disclosure a separate engagement with a separate fee? If so, how much would you charge for that?

Thank you,

Gary Massey

[Eric Green]

Gary, I usually ask for $5,000 and it includes the voluntary disclosure. This is an instance where I do not do a flat fee but instead charge by the hour against a retainer. The voluntary disclosure piece is actually quite simple. The process is:
1. We need to get pre-clearance – this takes maybe 15 minutes once you have the info. Its a simple fax with name, DOB, SSN and address
2. You still need to do the missing returns and sort out what a resolution to the unpaid balance looks like
3. Once pre-cleared you will submit the returns and disclosure letter
4. Resolve the tax debt

So I usually state in my letter that we will “represent you before the IRS” and just increase my retainer slightly to cover the additional time for the voluntary disclosure process.

[Gary Massey]

Eric, the material on thw TRN website does not seem to go into the subject of Voluntary Disclosure. Can you do a podcast on this, so we know when to use this?

Thank you,

Gary

[Eric Green]

Yes I can. But I use voluntary disclosure in three situations:
1. Someone who has not filed for several or more years – 7203 makes it a crime to willingly fail to file a tax return. This is not prosecuted often, but I think it would be malpractice for me to not consider it, and by getting in a pre-clearance request I get our foot in the door asap and can then get the returns done and in
2. If a client has been committing fraud or filing questionable returns we want to amend. I do not know what is going on behind the scenes at the IRS, so again this allows us to get in quickly with the pre-clearance and avoid any criminal referral
3. We have no records. By doing Voluntary Disclosure we can explain that: for instance my client has been paying everyone cash under the table, perhaps undocumented workers, and has no records and no proof. If we simply filed returns with our best guess and get audited we have a mess on our hands, possible fraud and immigration violations, and no records. We can disclose and deal with that much better through a VD where the IRS knows, and even if they audit and we have to argue about the numbers, I know criminal referral is off the table.

[Gary Massey]

So should we be doing a VDA for every non-filer?

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