IRS to overhaul voluntary disclosure program, lower penalties for crypto tax violations

Agency aims to resolve cases within 120 days and offer installment plans, while lawmakers pursue a separate crypto-focused program

By LineZotpaper AI staff

Published23 October 2026

Read Time2 min

The US Internal Revenue Service (IRS) is planning to overhaul its voluntary disclosure program, reducing penalties and accelerating the resolution of tax violations, including those involving cryptocurrencies, according to a Friday report by Forbes. The revised program, expected before December, targets a 120-day resolution timeline and may introduce installment payment options.

IRS Criminal Investigation Chief Jarod Koopman said the agency is working to introduce the revised program before December, with a goal of resolving cases within 120 days after taxpayers complete the required submission. The overhaul will not create a separate disclosure process for digital assets; instead, cryptocurrencies will be handled through the same voluntary disclosure procedures used for other forms of tax noncompliance.

Koopman told attendees at the UCLA Extension Tax Controversy Conference that penalties under the revised program would be substantially lower than those currently imposed, though he did not provide specific figures. The agency is also considering allowing taxpayers to settle outstanding liabilities through installment plans or offers in compromise.

The proposed changes mark a shift from the existing process, which can take a year or longer to complete. The current voluntary disclosure program is intended for taxpayers whose willful failure to comply with tax laws could expose them to criminal prosecution, rather than those who made unintentional reporting errors.

Separately, lawmakers are considering a distinct voluntary disclosure program tailored to crypto taxpayers, including those who made unintentional reporting errors. Section 502 of the proposed Digital Asset Tax Certainty Act would establish a process for correcting past violations with defined penalties, differing from the IRS’s existing program, which primarily addresses willful tax noncompliance. The bill cleared the House Ways and Means Committee in September.

Analysis

Why This Matters

The overhaul could shorten a lengthy, stressful process for taxpayers with past crypto or other tax violations, potentially reducing legal exposure and financial penalties.
Clearer, faster resolution may encourage more voluntary disclosures, improving tax compliance and IRS enforcement efficiency.
The separate crypto-focused bill under consideration signals growing recognition that digital asset tax issues require tailored rules, especially for unintentional errors.

Background

The IRS voluntary disclosure program has long been a mechanism for taxpayers to come forward before facing criminal investigation, but critics say its focus on willful noncompliance leaves little recourse for those who made honest mistakes. The agency’s current process is known to take a year or more, deterring some from participating. The proposed changes aim to modernize the program, while the Digital Asset Tax Certainty Act reflects a broader push to bring clarity to cryptocurrency taxation.

Key Perspectives

IRS Criminal Investigation Chief Jarod Koopman: The agency plans to offer substantially lower penalties, faster resolutions, and installment payment options, with no separate track for digital assets. Lawmakers behind the Digital Asset Tax Certainty Act: A separate voluntary disclosure program is needed for crypto taxpayers, including those who made unintentional reporting errors, with defined penalties rather than the current program’s focus on willful noncompliance.

What to Watch

Whether the IRS can meet its December deadline for the revised program, and what specific penalty levels and installment terms it announces.
The progress of the Digital Asset Tax Certainty Act through Congress after clearing the House Ways and Means Committee in September.
How the IRS’s unified approach to crypto affects taxpayer willingness to disclose, compared with the targeted bill’s alternative.

Sources

IRS plans lower tax disclosure penalties, including for crypto: Forbes · Cointelegraph

Checked

11 claims in this story checked against 1 source: 9 supported.

Show each claim

SupportedThe IRS is planning an overhaul that would reduce penalties for tax violations, including those involving cryptocurrency.Cointelegraph.com News: “The US Internal Revenue Service (IRS) is preparing to overhaul its voluntary disclosure program, with plans to reduce penalties and accelerate the resolution of tax violations, including those involving cryptocurrencies, according to a Friday report by Forbes.”
SupportedThe agency aims to resolve cases within 120 days after taxpayers complete the required submission.Cointelegraph.com News: “IRS Criminal Investigation Chief Jarod Koopman said the agency aims to introduce the revised program before December, with a target of resolving cases within 120 days of taxpayers completing the required submission process.”
Partly supportedThe IRS expects to introduce the revised program before December.Cointelegraph.com News: “IRS Criminal Investigation Chief Jarod Koopman said the agency aims to introduce the revised program before December”
Partly supportedThe summary says the agency will offer installment plans.Cointelegraph.com News: “The agency is considering allowing taxpayers to settle outstanding liabilities through installment plans or offers in compromise.”
SupportedThe revised program would not create a separate disclosure process for digital assets; crypto would use the existing procedures.Cointelegraph.com News: “The overhaul would reportedly not establish a separate disclosure process for digital assets. Koopman told attendees at the UCLA Extension Tax Controversy Conference that the IRS would handle digital assets through the same voluntary disclosure procedures used for other forms of tax noncompliance.”
SupportedPenalties under the revised program would be substantially lower, with no specific figures provided.Cointelegraph.com News: “The IRS official also indicated that penalties under the revised program would be substantially lower than those currently imposed, although he did not provide specific figures.”
SupportedThe existing process can take a year or longer to complete.Cointelegraph.com News: “The proposed changes would mark a shift from the existing process, which can take a year or longer to complete, according to Forbes.”
SupportedThe current program is intended for taxpayers whose willful noncompliance could expose them to criminal prosecution, rather than people who made unintentional reporting errors.Cointelegraph.com News: “The IRS’s current voluntary disclosure program is intended for taxpayers whose willful failure to comply with tax laws could expose them to criminal prosecution, rather than those who made unintentional reporting errors.”
SupportedLawmakers are considering a separate crypto disclosure program that would include taxpayers who made unintentional reporting errors.Cointelegraph.com News: “Meanwhile, lawmakers are considering a separate voluntary disclosure program aimed at crypto taxpayers, including those who made unintentional reporting errors.”
SupportedSection 502 of the proposed Digital Asset Tax Certainty Act would establish a process to correct past violations with defined penalties, unlike the IRS program focused primarily on willful noncompliance.Cointelegraph.com News: “Section 502 of the proposed Digital Asset Tax Certainty Act would establish a process for correcting past violations with defined penalties, unlike the IRS’s existing program, which primarily addresses willful tax noncompliance.”
SupportedThe bill cleared the House Ways and Means Committee in September.Cointelegraph.com News: “The bill cleared the House Ways and Means Committee in September.”