The US Internal Revenue Service (IRS) is set to revamp its voluntary disclosure program, with plans to lower penalties and speed up the resolution of tax violations, including those related to cryptocurrencies. IRS Criminal Investigation Chief Jarod Koopman announced that the agency aims to launch the updated program before December, with a goal of resolving cases within 120 days of taxpayer submissions.
The overhaul will not create a separate disclosure process for digital assets. Koopman stated that cryptocurrencies will be handled through the same voluntary disclosure procedures used for other tax noncompliance issues. He also hinted that penalties under the revised program would be significantly lower than current levels, though specific figures were not provided.
The IRS is considering allowing taxpayers to settle outstanding liabilities through installment plans or offers in compromise. The proposed changes represent a shift from the existing process, which can take over a year to complete. The current voluntary disclosure program is designed for taxpayers whose willful failure to comply with tax laws could lead to criminal prosecution.
Separately, lawmakers are exploring a voluntary disclosure program specifically for 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.