IRS Revises Voluntary Disclosure Program
The Internal Revenue Service (IRS) is set to revise its voluntary disclosure program, aiming to speed up the resolution of tax issues and offer more lenient payment options for taxpayers who come forward about past tax violations. According to a report from Forbes published on Friday, IRS Criminal Investigation Chief Jarod Koopman announced these changes are expected to roll out before December.
Key Changes to the Program
The new approach intends to target the resolution of cases within 120 days after taxpayers have completed necessary submissions.
Importantly, this reform doesn’t plan to create a distinct disclosure pathway specifically for cryptocurrency-related violations; rather, digital assets will be processed using the existing voluntary disclosure procedures applied to all types of tax noncompliance. Koopman indicated that the penalties in the revamped program would be notably reduced, although he did not specify precise new rates.
Additionally, taxpayers may soon have the option to address outstanding tax debts through installment payments or offers in compromise, enhancing the flexibility of the process.
Current Program vs. Legislative Discussions
Currently, the IRS’s voluntary disclosure program is designed for individuals who have willfully failed to adhere to tax laws, a stark contrast to cases of unintentional mistakes. The existing procedures often extend for a year or longer, creating difficulties for those wishing to rectify their tax status.
Concurrently, there is legislative discussion around a different voluntary disclosure initiative focused explicitly on cryptocurrency taxpayers. This initiative aims to assist those who may have made reporting mistakes without malintent. Under Section 502 of the proposed Digital Asset Tax Certainty Act, a clearer system would be established for rectifying past tax issues, providing defined penalties which differ from the existing IRS protocol that largely concentrates on intentional noncompliance. This legislative proposal has already progressed through the House Ways and Means Committee as of September.
