If you plan on coming into compliance for previous years of unfiled tax returns, you can choose to go through the streamlined or the voluntary disclosure programs; or, as some taxpayers choose to do, engage in a quiet disclosure. Unlike other disclosure programs set up by the IRS, quiet disclosures do not offer reduced civil penalties or criminal protection. Because of this risk, it is recommended that you speak to an attorney before considering quiet disclosure for unfiled tax returns in Washington DC.

What is a Quiet Disclosure?

A quiet disclosure refers to a filing of original or amended tax returns, and potentially international information returns, without going through the voluntary disclosure program or a streamlined disclosure program.

This is called quiet disclosure because the taxpayer is not alerting the IRS of any past mistakes, they are merely correcting their taxes. If a taxpayer lets their past problems go without correction and then they file their returns properly from the current tax period going forward, that is also sometimes referred to as quiet disclosure.

The Risks of Quiet Disclosure

A quiet disclosure is a gamble because there are risks when someone files back tax returns without going through one of the available programs. If they file back a large number of international forms without going through the streamlined program, that sets up the taxpayer for potentially tens of thousands of dollars of civil penalties associated with those late filed forms. They might even be assessed automatically against the taxpayer who filed late.

If someone has criminal exposure and files numerous late returns in order to come into compliance, that could be used as a roadmap for the IRS to bring criminal charges. This risk is reduced if they were to go through the voluntary fault disclosure program.

A Washington DC taxpayer might consider a quiet disclosure for unfiled taxes if they are not eligible for one of the official programs for whatever reason. Some others may just want to start filing for the current year onward and hope that the IRS does not look into previous periods, which is not guaranteed.

Advantages and Disadvantages

There may be some limited situations where a quiet disclosure makes sense because the penalty exposure is so small – i.e., small foreign accounts or only a small amount of unreported income. A common example is if a taxpayer forgets to report the interest made on their bank account. This is usually small enough that there is no need to go through one of the disclosure programs.

A disadvantage for the quiet disclosure in Washington DC is that penalties could end up being much larger than other disclosure options, and it does not offer the finality for prior years to the look-back period. The benefit of the voluntary disclosure or the streamlined disclosures is that any non-compliance in prior years is forgiven by the IRS.

Delinquent FBARs

If a taxpayer has unreported income and a tax bill with these quiet disclosures, that would prevent them from being eligible for delinquent FBAR submission procedures. When someone files a delinquent FBAR, the penalties start at $10,000 per year. Thus, having to file a prior year’s FBAR could complicate a quiet disclosure.

What to Do Before Engaging in a Quiet Disclosure

Someone may want to speak to a tax attorney if they have foreign accounts with unreported income, because it is wise to review the penalty exposure of doing nothing as compared to entering into the streamline program or the voluntary disclosure program. Depending upon what program is available, there will be a different amount of penalties. If the non-compliance is small enough, they may want to consider a quiet disclosure. There are no special forms or procedures for quiet disclosure, but a lawyer could inform someone of what risk they have and whether an official program is the better option.

Speak to an Attorney About Quiet Disclosure for Unfiled Tax Returns in Washington DC

While everyone needs to pay their taxes on time because they are required to under the law, one could still file these returns without sending a payment at that time if they are unable to pay the tax. Quiet disclosure for unfiled tax returns in Washington DC might put you in a sensitive situation, so please contact legal counsel before you make this decision.

Attorney John Pontius

Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC,  Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.

Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.

Client Reviews
John helped us with a DC tax audit and succeeded in getting us a "no change" final decision. The issues were related to two flow-through entities and the use of carry-forward operating losses -- something that the DC auditors struggled to understand and with which they did not have any...
Paul A
Mr. Pontius is extremely professional and was able to take care of my tax returns which includes international bank accounts quickly and at a very reasonable price. Would definitely recommend.
I received a fee this past November from the IRS for over $800 because of an error I made on my 2016 taxes. I called my cousin, John Pontius, and he immediately knew what steps needed to be taken. Thanks to him, the fee was cleared. A 10 minute conversation...
As an American citizen living in the Middle East my local banker informed me that I needed to file FBARs and report my worldwide income to the IRS. Through the recommendation of another attorney at an international law firm, I was introduced to John Pontius. Mr. Pontius efficiently and effectively...
Kareem S
John handled a difficult IRS lien for my client. He was excellent in getting the lien released so we could close on the property. I would highly recommend John .
Bobbie M
We were seeking tax advice with managing two properties, LLC, as well as some future financial planning. John responded to my call in a timely manner and was happy to answer our questions while referring us to specialists who can manage our accounts on a more regular basis.
Janelle M
View All