The IRS is preparing a revised Voluntary Disclosure Program, with Criminal Investigation Chief Jarod Koopman saying the agency aims to introduce it before December. The plan includes a 120-day resolution target for cases after taxpayers complete required submissions.
Background: IRS Voluntary Disclosure Program Still Risky as Overhaul Drops Form 14457 Willfulness Checkbox
Koopman announced the overhaul at the UCLA Extension Tax Controversy Conference. Forbes first reported his announcement on October 23, 2026. The plan is still being developed.
The goal is faster case resolution. The new program’s exact start date and penalty schedule have not been announced.
The program remains aimed at willful tax violations
The existing program is designed for taxpayers whose intentional tax-law violations could bring criminal prosecution, Koopman said. It is not meant to correct unintentional filing mistakes.
That distinction also applies to digital assets. The IRS does not plan a separate disclosure route for crypto-related violations; those cases will use the same procedures as other tax noncompliance.
Digital asset reporting is increasing. Form 1099-DA requirements for 2025 direct custodial platforms to report digital asset sales to the IRS.
The new timeline starts after a complete submission
Koopman said the IRS wants to finish cases within 120 days once a taxpayer has completed the required submission process. The clock would not begin merely when a taxpayer first contacts the agency.
The current process “can take a year or longer to complete,” Koopman said. He also said the timeline “can stretch well beyond a year.”
Penalty reductions are another planned change. Koopman described them as “substantially lower” than current penalties, but gave no amounts.
The IRS is also considering letting taxpayers settle outstanding liabilities through installment plans or offers in compromise. Those options remain under consideration, rather than confirmed terms of the revised program.
An earlier proposal set detailed filing and penalty terms
The forthcoming overhaul follows a separate IRS proposal announced in December 2025. The agency opened a 90-day public comment period that ended March 22, 2026, seeking input on updates to its disclosure practice, including a streamlined penalty framework.
Under that proposal, taxpayers receiving conditional approval would have three months to file delinquent or amended income tax returns, international information returns and FBARs. They would also have to pay taxes, penalties and interest in full and sign required agreements.
The proposed disclosure period generally covered the most recent six years. For delinquent returns, failure-to-file penalties would apply for each year, while failure-to-pay penalties would not. Amended returns would face a 20-percent accuracy-related penalty for each year.
The proposal also set terms for foreign-account and information filings. FBAR penalties would apply annually, subject to inflation adjustments. Penalties for delinquent or amended international information returns could reach $10,000 per return, per year.
Applicants would submit Form 14457, Voluntary Disclosure Practice Preclearance Request and Application, electronically. It would identify each year of noncompliance and include “a full and accurate description of the taxpayer's willful noncompliance.”
A taxpayer would also sign a closing agreement waiving statutes of limitations, accept accuracy-related penalties and sign an FBAR agreement when applicable. The IRS could rescind conditional approval if the taxpayer failed to comply.
Noncompliant taxpayers could face a full examination and civil or criminal penalties. The IRS said some disclosures may be reviewed without a full examination. If finalized, those proposed procedures would take effect six months after publication of final terms.
A separate bill would address unintentional crypto errors
Congress is pursuing a different approach for crypto taxpayers who want to correct past mistakes. Section 502 of the proposed Digital Asset Tax Certainty Act would create a correction procedure with defined penalty standards.
Eligible filers could qualify for penalties as low as 0% on the first $25,000 of tax deficiency, if they meet the bill’s conditions. The proposal targets unintentional reporting errors, unlike the IRS criminal-disclosure program.
The House Ways and Means Committee approved the bill in September. It remains separate from the IRS’s planned revision.
The willfulness requirement has drawn taxpayer concerns
The Taxpayer Advocate Service has identified the program as a “Most Serious Problem.” It pointed to a willfulness checkbox on Form 14457 that, since June 2024, requires taxpayers to “explicitly admit under penalty of perjury that they were willful in their actions that led to their noncompliance.”
The advocate said taxpayers and practitioners worry about making that admission before the IRS accepts them into the program. They describe the requirement as “a game-changer for the program.”
The IRS first revised Form 14457 in March 2019. It updated the form in March, June, September and November 2024, added frequently asked questions in March 2024 and last updated its VDP website in November 2024.
Comments on the earlier proposal were directed to vdp@ci.irs.gov with the subject line “PROPOSED VDP PUBLIC COMMENT.”
