Willfully or Not, That Is the Question

Willfully or Not, That Is the Question

Willfully or Not, That Is the Question

“I didn’t know; it was an honest mistake.” “No one told me that I had to do that.” “But honestly, I didn’t understand what that meant.” Do these phrases sound familiar? Of course, they could be applied to many different situations in life and most of us have probably uttered all of them, or something similar, at some point in our lives. However, when referring to a tax situation, specifically a mistake, these phrases might not carry much weight as far as the IRS is concerned.

What You Don’t Know Can Hurt You

Even though many people make honest mistakes when it comes to their taxes, that doesn’t mean the IRS will just turn the other cheek and give you a slap on the wrist. In other words, if you mess up, the IRS won’t just forgive and forget. In fact, the consequences could be very costly. Claiming ignorance might work in other situations, but the IRS won’t be so forgiving. Therefore, when it comes to your taxes, never assume that the IRS will consider what you call an innocent mistake, innocent.

Deciphering the IRS Code

No one is perfect and people do make honest mistakes, but as far as taxes go you must understand where the IRS draws the line between willful and non-willful. Failing to understand this concept can lead to severe penalties, including prison time and huge monetary penalties. One example of the difference between willful and non-willful is with offshore accounts. The IRS recently introduced a revamped amnesty program for non-willful activity for offshore accounts. You can read more about this program by clicking here.

Big Differences

However, if you fall into the willful category, then the IRS recommends that you use the OVDP. The difference is that the OVDP program requires eight amended tax returns and eight FBARs. On the other hand, if you use the streamlined program you only have to file three returns and six FBARs. You do have to pay your missing taxes and interest but you won’t be hit with any penalties, like you will in the OVDP program (20%). The new streamlined program obviously offers many advantages, but you better tread carefully.

Burden of Proof

Of course, anyone who is not compliant will want to be considered non-willful, but you need to make sure you can prove that. If it chooses, the IRS can take a deeper look into your situation and its perception of willfulness might not be the same as yours. According to the IRS, if there was any voluntary or intentional violation of your legal obligation then you are willful. In other words, if you did anything that appears to be a conscious choice to conceal anything, rather than comply with proper tax laws and procedures, then the IRS considers you willful. In that case, you could be facing some stiff penalties; even if you didn’t mean any harm.

Do Your Due Diligence

In many things in life ignorance is bliss. Not so with your taxes. The IRS considers it your obligation to know tax laws and requirements. If you aren’t sure of your tax obligations, then you might want to meet with the professionals at GROCO to make sure you are not willfully missing any important rules or procedures. That’s because with taxes, what you don’t know can hurt you.

We hope you found this article about “Willfully or Not, That Is the Question” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

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Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.


Alan L. Olsen, CPA, Wikipedia Bio



GROCO.com is a proud sponsor of The American Dreams Show.



The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business. Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most. They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

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MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges. Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

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