IRS to Ease Voluntary Tax Disclosure Rules Before December, Including Crypto

The Internal Revenue Service is moving to reduce the burden on taxpayers who voluntarily disclose previously unreported taxes. The plan also includes virtual assets, or cryptocurrencies. The agency aims to encourage voluntary filings by lowering penalties and shortening processing times.

Forbes reported on October 23 that Jared Koopman, head of the IRS Criminal Investigation division, told the UCLA Extension Tax Controversy Conference that the agency is aiming to introduce a revamped voluntary disclosure program before December.

The program is designed to resolve cases within 120 days once taxpayers complete the required filing procedures. Tax omissions involving virtual assets would be handled under the same voluntary disclosure process used for other tax violations.

The IRS also plans to ease the financial burden. Penalties under the revamped program will be significantly lower than they are now, Koopman said, though he did not disclose the scale of the reductions. Forbes also reported that the agency is reviewing ways to expand options for resolving unpaid taxes, including installment payments and negotiated settlements over tax liabilities.

Still, the current voluntary disclosure system is intended for taxpayers facing potential criminal penalties for willful violations of tax law. Simple mistakes or non-willful filing errors must be corrected through other channels, such as amended returns. Participating in a voluntary disclosure does not automatically exempt a taxpayer from criminal liability.

Separately, Congress is discussing a correction program for crypto taxpayers. Section 502 of the digital asset tax bill that passed the House Ways and Means Committee last month includes a process for addressing past violations, including non-willful errors, under a set penalty framework.