- The Washington Times - Wednesday, August 24, 2005

Q My questions are about a recent column. You responded to a woman who had failed to declare substantial amounts of income on several of her income-tax returns. She wanted to know about civil and criminal penalties imposed for evasion of income taxes. My main question has to do with a voluntary disclosure. Like your previous questioner, I have failed to report substantial amounts of income on my returns. I would like to make amends for my past oversights. Suppose I make a voluntary disclosure. Will the government settle for civil penalties, interest and taxes and forget about bringing criminal charges against me? Also, what IRS form do I use to correct a previously filed return? A: First, I’ll take care of your last question. Anyone who wants to revise an earlier Form 1040 can use Form 1040X (Amended U.S. Individual Income Tax Return). To obtain the form, call 800/TAX-FORM or download it from the IRS Web site, www.irs.gov. Amenders do not have an unlimited amount of time to file Form 1040X. There is a deadline, although it is fairly liberal. Generally, the law requires submission of a 1040X within three years from the date (including any filing extension) of filing the original return, or two years from the time the taxes were paid, whichever is later. The IRS treats a return filed early as though it was filed on the due date. To illustrate, you want to redo a Form 1040 for 2004 that you filed in March 2005. Ordinarily, the deadline for submission of a 1040X runs out on April 15, 2008. But if you obtained an automatic four-month extension of the filing deadline from April 15, 2005 to Aug. 15, 2005, the three-year limit means that 2004’s return remains open for amendment until Aug. 15, 2008. Before addressing your more important question, a few words of caution: Check first with a lawyer experienced in tax fraud investigations on whether, when and how to make a voluntary disclosure, notes Susan Litwer, a lawyer in Mamaroneck, N.Y. The long-standing IRS position is that it will not bring criminal charges against those people who come forward, make true voluntary disclosures and file accurate returns. But not surprisingly, the IRS does not consider disclosures to be “voluntary” when agency staffers have begun inquiries, as when taxpayers file amended returns after being notified that their 1040s have been selected for examination. cE-mail questions and comments to Julian Block at [email protected]yahoo.com. UNITED FEATURE SYNDICATE INC.

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