IRS Voluntary Disclosure Update May Fail to Lure Rich Tax Cheats

Proposed changes to an IRS program meant to lure wealthy tax evaders to come clean with a promise of lower penalties intend to make it more popular, but taxpayers could still hesitate to self-report.

The IRS is accepting comments on updates to its criminal voluntary disclosure practice, which the Taxpayer Advocate Service has called ineffective and unappealing.

Taxpayers will have to submit Form 14457, identifying all years of noncompliance and a description of their willful tax evasion. It also creates a penalty framework. Those accepted into the program generally avoid criminal prosecution but pay back taxes, interest, and some ...