What is a quiet disclosure?

Disclosing offshore accounts to the IRS is increasingly necessary for individuals and companies. As the IRS becomes more aggressive in pursuing owed taxes, disclosures of foreign accounts and ensuring proper payment are a necessity.

However, many choose to address this issue that doesn’t make waves. These “quiet disclosures” work by individuals submitting amended tax returns, making payments, and otherwise managing the problem without a formalized notification.

Quiet disclosures can be a risky gamble

The attraction of a quiet disclosure is that, if successful, a person can avoid scrutiny, some penalties and other unfavorable outcomes. However, choosing this path is in no way a guarantee. There is a strong chance that a quiet disclosure will alert the IRS to your case, causing greater scrutiny.

If your accounts become of interest to the IRS, that opens you to a significant level of risk. The next steps that the IRS takes are ones that you will have no control over.

Retaining control during the disclosure process

We wrote recently on the risks of having offshore accounts. In it, we spoke about the disclosure process that goes to the IRS. Initially, this process provided immunity from criminal charges, but as of 2018, that immunity is no more.

Even without immunity, open disclosing may be a preferable option to quiet disclosures simply because you can retain control. While the previous guarantees made disclosing more appealing, choosing to “be sneaky” or simply refusing to disclose leaves you open to significant fines, jail time, and other penalties.

The ultimate decision for your disclosure status is up to you. Before you make up your mind, you may want to speak with a skilled tax attorney who can offer you a thoughtful plan of action.