IRS Plans Lower Voluntary Disclosure Penalties Across Tax Cases, Including Crypto

The US Internal Revenue Service is preparing to revamp its voluntary disclosure program by cutting financial penalties and speeding up case processing for tax noncompliance, including violations involving digital assets ¹.

Speaking at the UCLA Extension Tax Controversy Conference, IRS Criminal Investigation Chief Jarod Koopman stated that the agency intends to implement the updated program before December ¹. Under the planned framework, the IRS targets resolving cases within 120 days after a taxpayer finishes the formal submission process ¹. The revised rules will not create a standalone track for digital assets; instead, cryptocurrency matters will follow the standard voluntary disclosure system alongside other tax compliance cases ¹.

Koopman indicated that penalties will be substantially lower than existing levels, though the agency has not yet disclosed exact figures ¹. The IRS is also weighing whether to let participants satisfy back taxes through installment agreements or offers in compromise ¹. Under the current system, cases can take a year or more to conclude ¹. That structure is designed specifically for individuals whose willful failure to report income exposes them to potential criminal prosecution, rather than taxpayers responsible for accidental accounting mistakes ¹. Taxpayers navigating baseline obligations can review crypto taxes in the US for context on digital asset tax treatment ¹.

Parallel Legislative Efforts

While the IRS updates administrative procedures, federal lawmakers are advancing separate statutory relief ¹. The House Ways and Means Committee approved the Digital Asset Tax Certainty Act in September ¹. Section 502 of that legislation proposes a dedicated disclosure program specifically for cryptocurrency holders, offering structured penalties and covering unintentional filing mistakes alongside noncompliance ¹.