Voluntary Disclosure — Pros and Cons

When you’re behind on taxes, one option to consider is the IRS Voluntary Disclosure Program. It allows taxpayers who haven’t filed or who underreported income to come forward before the IRS comes to them. But is it always the right move? Let’s look at the pros and cons.

What Is Voluntary Disclosure?

The program is designed for taxpayers who may have committed serious noncompliance—like not filing for many years, hiding income, or failing to report offshore accounts. By voluntarily disclosing before the IRS discovers the issue, you can often reduce the risk of criminal prosecution.

The Pros

• ✅ Reduced Criminal Risk: The biggest benefit is avoiding criminal charges for willful tax evasion.

• ✅ Potentially Lower Penalties: The IRS may be more flexible when you come forward on your own.

• ✅ Closure and Certainty: You take control of the process instead of waiting for the IRS to act.

The Cons

• ❌ Not for Everyone: If your case is simple non-filing with no signs of fraud, you may not need the formal disclosure program.

• ❌ You’ll Still Owe Taxes: Disclosure doesn’t erase liability—it just manages risk.

• ❌ Complex Process: Requires careful documentation, legal guidance, and often negotiation with the IRS.

Who Should Consider It?

• Taxpayers with large amounts of unreported income

• Cases involving offshore accounts

• Situations where fraud could be alleged

Voluntary disclosure is a powerful tool, but it’s not a one-size-fits-all solution. For some, it’s the best way to avoid criminal risk. For others, simpler compliance strategies work just as well. If you’re unsure whether voluntary disclosure is right for you, consult a professional. We can assess your situation and guide you toward the safest path forward.