IRS News Release  
December 07, 1992

IRS Says Nonfilers Who Come
Forward Are Not Prosecuted

Responding to the apprehensions of people who want to come forward and file delinquent tax returns but are concerned about the IRS criminal investigations, the IRS has explained how it handles such cases.

In a speech Friday to the Tennessee Tax Institute in Nashville, IRS Commissioner Shirley Peterson said that the IRS is aware that some nonfilers are anxious about identifying themselves to the IRS because of the possibility of prosecution. Commissioner Peterson outlined the IRS' long-standing practice of not recommending prosecution of nonfiler cases when the taxpayer voluntary discloses nonfiling and reiterated that the vast majority of nonfilers need only be concerned about filing and paying what they owe.

"Some taxpayers may receive a letter from a service center about a delinquent return and believe erroneously that they are being criminally investigated," Commissioner Peterson said. "The nonfiler program is a long-term effort to improve tax compliance and the whole purpose is to get people back in the system, not to prosecute ordinary people who made a mistake."

The IRS is responsible for investigating possible criminal violations of the tax law. Under IRS procedures, any taxpayer who is under criminal investigation must be notified by a IRS criminal investigator. At the end of the investigation, if warranted, the IRS can recommend to the Department of Justice that prosecution be pursued. However, the final decision to seek prosecution rests with the Department of Justice.

Since 1952, the IRS has made a practice of taking into consideration the fact of taxpayer's voluntary disclosures when determining whether to recommend criminal prosecutions. The IRS' voluntary disclosure practice is not an amnesty or a grant of immunity from prosecution. While the IRS will not assure that it would never, under any circumstances, recommend the criminal prosecution of an individual who comes forward voluntarily to report the failure to file of one or more tax returns, the IRS' practice has been not to do so where the person:

  • Informed the IRS that he/she has not filed tax returns for one of more taxpayer periods;
  • Had only legal source income, in other words no part of the income was earned from activity which is illegal under federal or state law;
  • Made the disclosure prior to being contacted by the IRS-- in this context, "contact by the IRS" means that the taxpayer and/or the taxpayer's representative has received notification by the IRS by a telephone call, letter or personal visit that the taxpayer is under criminal investigation;
  • Either filed a true and correct tax return or cooperated with the IRS in ascertaining the correct tax liability; and,
  • Either paid in full the amount due or, in those situations where the taxpayer was unable to make full payment, made bona fide arrangements to pay.

Commissioner Peterson said that the IRS has no intention of altering its practice or departing from the consistent manner in which it has applied the voluntary disclosure practice in determining whether to recommend criminal prosecutions in nonfiler cases. She also said that the Internal Revenue Manual will be updated to assure consistent guidance to all employees about agency practice.

However, Commissioner Peterson pointed out that it is always to the taxpayer's benefit to come forward as soon as possible. In some cases of egregious nonfiling, the initial contact from the IRS will be for criminal investigation purposes.

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