The IRS Voluntary Disclosure Practice (VDP) is a program administered by IRS Criminal Investigation that allows taxpayers who may have intentionally or willfully failed to comply with their tax obligations — including failing to report income, pay taxes, or submit required information returns — to come forward, disclose their noncompliance, and resolve their liabilities without facing potential criminal prosecution. Unlike the Streamlined Filing Compliance Procedures, which are designed for non-willful conduct, the VDP is intended for taxpayers whose noncompliance was intentional or deliberate and who therefore cannot certify non-willfulness. For taxpayers with possible criminal exposure, the VDP may be the most appropriate path to resolving past noncompliance and limiting penalties to a more predictable framework.
The VDP process begins with filing Part I of Form 14457 (Voluntary Disclosure Practice Preclearance Request and Application) to request preclearance and determine eligibility. If preclearance is granted, the taxpayer must submit Part II. Recent revisions to Form 14457 have made the program significantly more challenging. The IRS generally applies substantial penalties. Given these stakes, any misstep in the application, incomplete documentation, or poorly supported disclosure can result in significantly higher penalties or even criminal referral.
Patel Law Offices has counseled over 1,000 clients in voluntary disclosure cases and is one of the most experienced IRS offshore and voluntary disclosure law firms. Led by Mr. Patel — a Board Certified Tax Law Attorney and graduate of Georgetown (J.D.) and New York University (LL.M. in Tax) — our firm has closely tracked every evolution of the IRS voluntary disclosure landscape, from the original OVDP through the current VDP and its most recent proposed revisions. We help clients evaluate whether the VDP, the Streamlined procedures, or another compliance pathway is the right fit based on their specific facts and level of exposure. If you have willfully failed to report foreign accoun