US IRS Plans to Significantly Reduce Penalties for Voluntary Disclosure of Tax Violations, Crypto Assets Integrated into Unified Processing Procedure

According to Forbes, Jarod Koopman, head of the Criminal Investigation Division at the Internal Revenue Service (IRS), disclosed that the agency is preparing major reforms to the Voluntary Disclosure Program (VDP), with new rules expected to be published by the end of November aimed at lowering the costs for taxpayers voluntarily disclosing historical tax non-compliance. Under the proposed reforms, the IRS plans to significantly reduce current VDP penalties and cut the case processing timeframe from previously potentially over a year to a maximum of 120 days. The agency is also considering implementing installment payment plans and compromise settlement mechanisms to assist taxpayers unable to settle their tax liabilities in a lump sum. Regarding digital assets such as cryptocurrency, Koopman made it clear that the IRS will not create a standalone voluntary disclosure program; related tax compliance matters will be processed uniformly under the existing framework. As of now, the exact penalty reduction amounts and implementation details of the new rules remain undisclosed.