Categories: General Tax Terms
Voluntary Disclosure refers to the proactive act of a taxpayer or entity reporting information to tax authorities that is not required by law but is disclosed in order to correct inaccuracies or omissions in previous filings.
This practice can involve the reporting of unreported income, correcting misclassifications, or providing additional context for transactions. By voluntarily disclosing this information, taxpayers may mitigate penalties and interest associated with non-compliance, and potentially foster a cooperative relationship with tax authorities. For example, if an individual realizes they failed to report a freelance income in prior years, they may choose to file an amended return and disclose this income voluntarily.
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