IRS Voluntary Disclosure Program Lower Penalties and Faster Resolutions Planned for Crypto Taxpayers

Taxpayers who admit to past mistakes may soon pay less for coming forward. The Internal Revenue Service is getting ready to rework its voluntary disclosure program, with smaller penalties and quicker case closures, and the changes would apply to people with unreported crypto as well.

Timeline and Goals of the New Program

Jarod Koopman, chief of IRS Criminal Investigation, said the agency hopes to launch the updated version before December. The aim is to settle each case within 120 days after a taxpayer finishes the required paperwork. That would be a big change from the current process, which can drag on for a year or more.

Crypto Follows the Same Rules

Speaking at the UCLA Extension Tax Controversy Conference, Koopman said digital assets would not get a separate track. They will go through the same procedures as any other tax noncompliance. He promised substantially lower penalties without naming numbers, and said installment plans or offers in compromise are being considered. The existing program is meant for willful violations that could lead to criminal charges, not honest reporting errors.

Congress Weighs Its Own Crypto Proposal

Lawmakers are looking at a separate path. Section 502 of the Digital Asset Tax Certainty Act would let crypto holders, including those who made unintentional errors, correct past filings with set penalties. The bill cleared the House Ways and Means Committee in September.