Quiet disclosure, also known as quiet corrections, refer to the process of correcting past tax errors or omissions without drawing attention from the IRS. This might involve filing amended returns or submitting delinquent returns without disclosing the reason for the change to the IRS. While quiet disclosure may seem like an attractive option for those who are concerned about the potential consequences of coming forward, such as financial penalties or even criminal charges, they are not without risks.

One advantage of quiet disclosure is that they can help taxpayers correct past mistakes without drawing attention to themselves. This may be particularly appealing to those who are concerned about the potential consequences of coming forward or who are unsure about how to properly report the error or omission. In addition, quiet disclosure may allow taxpayers to avoid the time and expense of participating in formal disclosure programs, such as the IRS’s Voluntary Disclosure Program.

However, there are also significant risks associated with quiet disclosures. For one, the IRS has a number of tools at its disposal to identify taxpayers who have made quiet disclosures, including data analytics and information received from whistleblowers. If the IRS does discover that a taxpayer has made a quiet disclosure, they may be subject to financial penalties and even criminal prosecution. In addition, quiet disclosure may not provide the same level of protection against penalties and prosecution as formal disclosure programs, such as the Voluntary Disclosure Program.

It is also important to note that quiet disclosures may not be the most effective way to correct past mistakes. In some cases, the errors or omissions on a taxpayer’s returns may be more significant or complex, and a quiet disclosure may not fully address the issue. In these cases, it may be necessary to participate in a formal disclosure program, such as the Voluntary Disclosure Program, in order to fully resolve the matter. Formal disclosure programs can provide a number of benefits to taxpayers, including the opportunity to come forward voluntarily and disclose the reason for the error or omission, as well as some measure of protection against financial penalties and criminal prosecution. However, these programs also come with their own set of rules and requirements, and taxpayers may be required to pay back taxes, interest, and penalties as part of the process.

Ultimately, the decision of whether or not to make a quiet disclosure should not be taken lightly. While quiet disclosures may seem like an appealing option for correcting past mistakes, they are not without risks and may not be the best solution for everyone. If you are considering making a quiet disclosure, it is important to carefully consider your options and seek the guidance of a tax professional before making a decision. It is always better to consult with a tax professional before making a quiet disclosure, as they can help you determine the best course of action based on your specific circumstances and ensure that your tax returns are accurate and complete.