The U.S. Internal Revenue Service is preparing an overhaul of its voluntary disclosure program that would lower penalties and accelerate the resolution of tax violations, including those involving cryptocurrencies, according to a Friday report by Forbes.
IRS Criminal Investigation Chief Jarod Koopman said the agency aims to introduce the revised program before December and target resolving cases within 120 days after taxpayers complete the required submission process. He spoke at the UCLA Extension Tax Controversy Conference, according to the report.
No separate crypto process
The overhaul would not establish a separate disclosure process for digital assets. Koopman said the IRS would handle digital assets through the same voluntary disclosure procedures used for other forms of tax noncompliance.
Lower penalties and payment options
Koopman indicated that penalties under the revised program would be substantially lower than those currently imposed, although he did not provide specific figures. The agency is considering allowing taxpayers to settle outstanding liabilities through installment plans or offers in compromise, according to the report.
The proposed changes would 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.
Separate legislative proposal
Lawmakers are considering a separate voluntary disclosure program aimed at 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, unlike the IRS’s existing program, which primarily addresses willful tax noncompliance. The bill cleared the House Ways and Means Committee in September.
