The IRS disclosure overhaul being prepared as of October 23, 2026, would reduce penalties and speed up the resolution of willful tax violations, including those involving cryptocurrencies. IRS Criminal Investigation Chief Jarod Koopman said the agency aims to introduce the revised program before December 2026, with a target of resolving cases within 120 days after taxpayers complete the required submissions.
Key Takeaways
- Koopman said penalties would be substantially lower, but gave no specific figures.
- Cryptocurrency disclosures would use the same procedures as other tax violations, rather than a separate IRS process.
- The planned overhaul remains distinct from proposed legislation addressing past digital-asset reporting violations.
Table of Contents
- IRS disclosure overhaul aims for a shorter process
- Willful violations remain the key eligibility distinction
- Separate crypto legislation is still a proposal
- Conclusion
IRS disclosure overhaul aims for a shorter process
Speaking at the UCLA Extension Tax Controversy Conference, Koopman outlined a planned revision to the agency’s voluntary disclosure program. The 120-day resolution target would run from completion of the required submission process, not from a taxpayer’s first contact with the IRS.
Koopman said penalties under the revised program would be substantially lower than those currently imposed. Without a published penalty schedule, however, the size of any reduction remains unclear.
The agency is also considering allowing taxpayers to settle outstanding liabilities through installment plans or offers in compromise. Those payment arrangements remain under consideration, rather than confirmed terms of the revised program.
| Item | Details |
|---|---|
| Existing disclosure standard | A disclosure must be truthful, timely and complete. |
| Timing restriction | Disclosure must precede an IRS civil examination or criminal investigation and certain other enforcement-related information. |
| Cooperation requirement | Participants must cooperate with the IRS in determining the correct tax liability. |
| Criminal exposure | Voluntary disclosure does not automatically guarantee immunity from prosecution. |
Willful violations remain the key eligibility distinction
The IRS’s existing voluntary disclosure guidance describes a process for taxpayers whose willful failure to comply with tax obligations creates potential criminal exposure. It directs people who made unintentional errors toward other correction options, including amended or past-due returns.
That distinction matters for cryptocurrency holders: including digital assets in the planned overhaul would not, by itself, turn the program into a general correction route for every missed or mistaken crypto filing. Koopman said digital assets would be handled through the same disclosure procedures as other forms of tax noncompliance.
Separate crypto legislation is still a proposal
Lawmakers are considering a separate route under Section 502 of the proposed Digital Asset Tax Certainty Act. That provision would establish a process for correcting past digital-asset tax violations with defined penalties, including for taxpayers who made unintentional reporting errors.
The bill cleared the House Ways and Means Committee in September 2026, but that committee action did not make it law. The legislative proposal and the IRS administrative overhaul are separate initiatives, with different implications for who could participate.
Conclusion
The next milestone to watch is the IRS’s planned release of revised procedures before December 2026. Final terms would clarify the penalty reductions, payment options and operation of the 120-day target.
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