By Basiran 
The United States Internal Revenue Service is preparing to launch a comprehensive overhaul of its voluntary disclosure program, introducing plans that aim to significantly reduce penalties and drastically accelerate the resolution of tax violations. According to a recent report published by Forbes, the upcoming modernization efforts will encompass a wide range of tax noncompliance issues, including those involving complex digital assets and cryptocurrencies.
The initiative signals a notable pivot in how federal tax authorities approach individuals and entities seeking to bring their past financial reporting into alignment with current regulations. By streamlining bureaucratic hurdles and lowering the financial barriers to coming forward, tax enforcement officials hope to encourage a higher volume of voluntary compliance across the United States.
During discussions regarding the upcoming changes, IRS Criminal Investigation Chief Jarod Koopman indicated that the federal agency is actively aiming to introduce the revised program before December. Alongside a swift rollout, the agency has established an ambitious operational target of resolving incoming cases within a strict 120-day window. This timeframe begins immediately after taxpayers complete the required submission process, representing a dramatic departure from standard administrative timelines.
According to insights shared by Forbes, the current voluntary disclosure process frequently spans a year or longer to reach a final resolution. The prolonged nature of existing proceedings has historically served as a deterrent for taxpayers weighing whether to self-report historical oversights or potential violations. By compressing the resolution period down to roughly four months, the IRS hopes to remove administrative bottlenecks and provide quicker legal and financial certainty to participants.
Despite the rapid expansion of digital assets within the global financial ecosystem, the upcoming overhaul will reportedly not establish a separate, standalone disclosure process exclusively for cryptocurrencies and other digital tokens. Speaking to attendees at the UCLA Extension Tax Controversy Conference, Koopman clarified that the IRS intends to handle digital assets through the exact same voluntary disclosure procedures currently utilized for traditional forms of tax noncompliance.
This unified procedural framework means that individuals holding undeclared cryptocurrency gains, staking rewards, or trading income will navigate the exact same self-reporting pathways as taxpayers managing traditional financial assets. Tax professionals note that this approach maintains consistency across the agency’s enforcement divisions while integrating digital currency reporting into established regulatory channels.
Furthermore, the IRS official indicated that the financial penalties imposed under the revised program will be substantially lower than those currently enforced. While Koopman did not provide specific percentage figures or concrete penalty schedules during his remarks, he noted that the agency is exploring flexible relief mechanisms. Specifically, the IRS is considering allowing qualifying taxpayers to settle their outstanding liabilities through structured installment plans or formal offers in compromise.
These potential relief options are designed to accommodate individuals who wish to rectify their tax standing but lack the immediate liquidity to pay their historical liabilities in a single lump sum. By offering more manageable pathways to settlement, the federal agency aims to incentivize voluntary participation without imposing ruinous financial burdens that could otherwise discourage compliance.
The agency’s current voluntary disclosure program is specifically intended for taxpayers whose willful failure to comply with federal tax laws exposes them to the threat of criminal prosecution. It stands distinct from administrative routes meant for individuals who made honest, unintentional reporting errors or simple oversight mistakes. The existing framework requires rigorous disclosures and carries stringent baseline requirements to ensure that individuals seeking protection from criminal referral fully cooperate with federal investigators.
While the IRS moves forward with its administrative overhaul, federal lawmakers in Washington are simultaneously considering a separate legislative voluntary disclosure program tailored specifically to cryptocurrency taxpayers, including those who made unintentional reporting errors. This legislative effort is embodied in Section 502 of the proposed Digital Asset Tax Certainty Act, which has recently progressed through key congressional milestones.
The proposed legislation cleared the House Ways and Means Committee in September, signaling bipartisan interest in addressing the unique complexities of digital asset taxation. Unlike the IRS’s administrative program, which primarily targets willful tax noncompliance and shields participants from criminal exposure, the proposed statutory mechanism would establish a formalized process for correcting past reporting violations with clearly defined, predictable penalties. This legislative track addresses a longstanding concern among crypto market participants who fear that minor, accidental reporting discrepancies on blockchain transactions could be misconstrued as intentional evasion under current regulatory standards.
As both the executive branch through the IRS and the legislative branch through Congress pursue parallel efforts to address tax compliance in the digital age, taxpayers and financial professionals are closely monitoring how these policies will intersect. With the IRS targeting a rollout before December and lawmakers advancing structural legislative reforms, the landscape for resolving historical tax and crypto reporting discrepancies is poised for significant transformation in the months ahead.
Ali Ikhwan 
Asro 
Sagoh