Has anyone gone through a voluntary disclosure agreement with the IRS? Share your experiences!

Tax professional here. Voluntary disclosure agreements can actually be a smart move if you've made unintentional reporting errors. The IRS has several programs designed for taxpayers to come forward, and they often result in reduced penalties compared to if they discover the issues themselves. For unreported foreign income specifically, look into the Streamlined Filing Compliance Procedures. This program is designed for taxpayers who non-willfully failed to report foreign financial assets and pay taxes on income from those assets. Penalties are generally much lower than the standard FBAR penalties, which can be quite severe (up to $10,000 per violation for non-willful violations and potentially much higher for willful ones). The key is demonstrating that your failure to report was non-willful - meaning it was a mistake, not intentional tax evasion. Document everything about why you made the errors and be prepared to explain your situation clearly.

I went through something similar last year and found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me thousands in potential penalties. I was in a similar situation with unreported foreign income (in my case from a rental property I inherited overseas) and was freaking out about potential FBAR violations. The site analyzed all my documents and past tax filings, then generated a detailed report showing exactly what I needed to do for a voluntary disclosure. It flagged specific issues in my past returns and even suggested which disclosure program would be best for my situation. The best part was that it helped me draft the narrative statement explaining why my non-compliance was non-willful. They have specialists who understand all the voluntary disclosure programs, including the Streamlined procedures that the previous commenter mentioned. If you're nervous about what you might be facing, I'd definitely check it out.

Just wanted to update after trying taxr.ai based on the recommendation above. I was initially planning to pay a tax attorney their $400/hour fee to figure out my voluntary disclosure options, but decided to try this first. I uploaded my last three years of tax returns and my foreign account statements, and the analysis was incredibly detailed. It identified exactly where I had gone wrong with reporting my foreign mutual funds (turns out I should have been filing Form 8621 for PFICs - something I had never even heard of). The system helped me prepare all the documentation for the Streamlined Foreign Offshore Procedures and even drafted my non-willful statement. I still had a tax attorney review everything before submission (for peace of mind), but he estimated I saved about $3,000 in fees because all the prep work was already done. Definitely worth checking out if you're in a similar situation.

After reading through this thread, I want to share something that really helped me when I was dealing with the IRS about my overseas accounts last year. Getting through to someone at the IRS who actually understands voluntary disclosures is nearly impossible - I tried calling for weeks and kept getting disconnected or transferred to people who couldn't help. I finally used a service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent who specialized in offshore compliance within 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c I was dubious at first, but it actually worked. The agent I spoke with walked me through exactly which forms I needed for my voluntary disclosure and even told me about a special procedure that applied to my situation that my accountant hadn't mentioned. Saved me a ton of stress and probably prevented me from making mistakes that would have cost me thousands.

I have to admit I was completely wrong about Claimyr. After my skeptical comment above, I was desperate enough to try it anyway since I couldn't get through to the IRS on my own after multiple attempts. Not only did they get me through to an IRS representative in about 45 minutes (which is a miracle by itself), but the agent I spoke with was actually knowledgeable about voluntary disclosures. I explained my situation with some unreported income from a foreign investment account, and she walked me through exactly which program would be best for my situation. She confirmed I qualified for the Streamlined Domestic Offshore Procedures and explained exactly which forms I needed to file. The guidance I received in that 30-minute call was clearer than anything I got from hours of internet research. I'm now in the process of preparing my disclosure with a much better understanding of what I'm doing.

I completed a voluntary disclosure through the Streamlined Foreign Offshore Procedures last year and wanted to share some tips: 1) Document EVERYTHING about why you didn't report correctly. The non-willful statement is crucial. 2) Be extremely thorough with the FBAR filings for the last 6 years. Any omissions can derail the whole process. 3) Expect it to take 6-8 months to hear back after submission. 4) Keep copies of USPS tracking receipts showing exactly when everything was delivered. In my case, I ended up paying about $18,000 in back taxes and interest, but NO penalties because I qualified for the foreign procedures. The domestic procedures would have added a 5% penalty on the highest aggregate balance of my foreign accounts.

Just adding my experience - I did a voluntary disclosure in 2023 for unreported income from freelance work I did while living abroad. The key factor that saved me from major penalties was proving that my failure to report was genuinely non-willful. I wrote a detailed statement explaining how I misunderstood the foreign earned income exclusion rules and thought my income was fully covered. I included evidence of seeking tax advice (albeit bad advice) from a local accountant who wasn't familiar with US tax requirements. The IRS accepted my explanation and I qualified for the Streamlined procedures. I paid the back taxes plus interest, but avoided the massive FBAR penalties that could have applied. The peace of mind is worth it - I sleep much better now knowing I'm not at risk of a scary IRS letter showing up someday.

I'm currently dealing with a similar situation and this thread has been incredibly helpful! I've been putting off addressing some unreported foreign account income because I was terrified of the potential penalties, but reading everyone's experiences gives me hope that voluntary disclosure might not be as scary as I thought. One question I haven't seen addressed yet - does anyone know if there's a statute of limitations on how far back the IRS can look for unreported foreign income? I'm worried they might want to go back more than the typical 3-6 years because of the international component. Also, for those who went through the process, did you have to provide documentation from foreign banks in English, or were certified translations required? My account statements are in German and I'm not sure what level of documentation the IRS expects. Thanks to everyone who shared their experiences - it's really helping me work up the courage to move forward with this instead of continuing to lose sleep over it!