Hidden Risks of an IRS Quiet Disclosure

Added: 2026-05-27

[00:00:00]For taxpayers who submit IRS quiet disclosures, it's important to note that they may be getting themselves into hot water. They may find themselves in trouble that they would not ordinarily have found themselves in. Here's three hidden risks. The first one is the IRS may begin investigating you. So, they don't have to tell you that they're investigating you. They get the quiet disclosure. uh instead of calling you out and penalizing you, they start going through their own files and maybe they find information from FATKA, the Foreign Account Tax Compliance Act, where hundreds of thousands of foreign financial institutions report US taxpayer information to the IRS, US government, and they start piecing it together to determine just how out of compliance you are. Second, you may become subject to an audit. See, oftentimes when you do things like the streamline procedures, you reduce the chance of audit. If you do something like a quiet disclosure and then you're discovered by the IRS, it might lead to audit. audits can lead to significant fines and penalties. And third is you may take a ordinarily simple scenario and making it something much more complicated. Take the taxpayer who lives overseas. Uh they have a significant amount of assets, investments, and income, but they qualify for the streamlined foreign offshore procedure.

[00:01:00]So there's no penalty. They talk to some tax attorney or to some other tax professional that go them into doing a quiet disclosure. The taxpayer gets caught down the line and then the IRS wants to take the position that the taxpayer is willful. This could lead to 50% penalties on the maximum account values and otherwise they would have been subject to no penalties and potentially avoided fines altogether.