The IRS Is About to Make Coming Clean Faster and Cheaper. Here Is How to Be Ready.

KEY TAKEAWAYS

• The IRS says a rebuilt Voluntary Disclosure Program is weeks away. Its Criminal Investigation chief told a tax conference on August 25 that the new program should be public within 60 days.
• The changes he described: streamlined intake instead of a full examination, a 120-day target for resolving cases, and a cut in the willful foreign account (FBAR) penalty from 50% of the account balance to around 20 to 30 percent.
• Cryptocurrency comes inside the program too, with a lower penalty where the noncompliance was not fraud.
• The catch: you have to arrive with every unfiled return ready to file. The preparation starts before the program opens.

Last month we explained that the IRS deleted its penalty-free path for fixing late foreign account reports. This month the news runs the other direction: the IRS is about to open a better door for the hardest cases, and it rewards the people who are ready when it opens.

A New Program in Weeks, Not Someday

The Voluntary Disclosure Program is the IRS's front door for serious tax problems: years of unfiled returns, unreported income, conduct the IRS could otherwise treat as willful. Speaking at a tax conference on August 25, Jarod Koopman, chief of IRS Criminal Investigation, said the agency is close to finalizing a rebuilt program and expects to make it public within 60 days.

What Would Change

• Speed. Today's program runs through a full examination. The new version would use a streamlined up-front screening and target 120 days from intake to resolution.
• Cost. The willful FBAR penalty, currently 50% of the account balance, would drop to around 20 to 30 percent. On a $1 million account, that is the difference between a $500,000 penalty and one closer to $200,000 to $300,000.
• Crypto. Digital assets move directly into the general program, with a lower penalty rate where the noncompliance was not fraudulent.

Before You Get Excited, the Fine Print

The program has not been released. Everything above comes from public remarks by IRS officials, and the numbers are their approximations, not published terms. The IRS's December proposal drew pushback for requiring full payment within three months of conditional approval, and no one outside the agency knows yet how the final version treats taxpayers who cannot write that check. What is certain is that the program is discretionary: the IRS built it, and the IRS can change it.

What This Means for You

• If the penalty math kept you out, it may be about to change in your favor. This is the moment to have your situation evaluated, before the program opens and the line forms.
• A 120-day resolution only works if you show up ready. Unfiled returns have to be prepared and records assembled before you walk in the door. That work takes time, so start it now.
• The oldest rule still applies. Voluntary disclosure only helps people who come forward before the IRS finds them first. An audit letter or an investigation takes this door off the table.

Timing alert: If the program drops on the announced schedule, it will land within weeks. The taxpayers who benefit first will be the ones whose returns and records are already done. For help with unfiled taxes and unreported income, call Strategic Tax Planning at (202) 455-6010 or schedule a confidential consultation.