IRS Plans Lower Tax Disclosure Penalties and Faster Resolutions, Including Crypto Cases

The U.S. Internal Revenue Service is preparing a broad update to its voluntary disclosure program, with plans to reduce penalties and accelerate case resolutions for taxpayers who come forward to address tax violations, including cryptocurrency-related noncompliance. Forbes reported the move Friday, citing senior IRS leadership. Jarod Koopman, chief of IRS Criminal Investigation, said the agency intends to roll out a revised program before December. He said the IRS is targeting resolution within 120 days after a taxpayer completes the required submission process. Digital assets would be handled under the same voluntary disclosure framework as other tax noncompliance, not through a separate crypto-specific process, according to Koopman. He said revised penalties would be substantially lower than current levels but did not give specific amounts. The IRS is also considering expanded settlement options such as installment plans and offers in compromise. The voluntary disclosure program is designed mainly for taxpayers exposed to criminal prosecution because of willful failure to comply with tax laws. The current process can take a year or longer, and the IRS wants to streamline outcomes for eligible participants. Koopman outlined the intent to move away from drawn-out timelines at the UCLA Extension Tax Controversy Conference. Under the proposed approach, taxpayers would submit required materials, and the IRS would aim to resolve the case within 120 days after submission is complete. For investors, traders, and builders in crypto markets, the practical effect is predictability. Tax enforcement decisions often hinge not only on what happened but on how quickly parties can resolve exposure. A shorter resolution window can reduce uncertainty for taxpayers trying to close compliance gaps and avoid escalating disputes. Crypto tax compliance is a recurring issue in U.S. policy discussions, but Koopman indicated the IRS does not plan to create a separate disclosure procedure for digital assets. Digital assets would instead be treated through the same voluntary disclosure procedures used for other forms of tax noncompliance. That distinction matters because the IRS program is not a catch-all for every reporting problem. It targets willful failures, not unintentional mistakes, so eligibility depends on the facts surrounding reporting decisions by a taxpayer. Remarks by Koopman also suggest the IRS is pursuing operational reform—lower penalties, quicker timelines, and potential settlement flexibility—rather than redefining the behavior that qualifies for relief. Koopman said penalties under the revised program would be substantially lower than those currently imposed. He did not provide figures, so taxpayers should treat the statement as directional rather than specific guidance on the cost of a particular case. Forbes also reported that the IRS is considering whether taxpayers could settle outstanding liabilities through installment plans or offers in compromise. If adopted, those options could matter for crypto-related taxpayers whose liabilities involve complex records, such as transactions across multiple venues or periods, where paying in full immediately may not be feasible. Even without penalty figures, the direction points to a more negotiable compliance experience. For eligible taxpayers, that could lower the barrier to addressing past tax problems proactively instead of waiting for enforcement action. Congress is debating a separate route for crypto mistakes. While the IRS appears set to handle digital assets within its existing voluntary disclosure framework, lawmakers are considering legislation that could create a distinctly crypto-oriented pathway for certain taxpayers. Forbes reported that Congress is working on a separate voluntary disclosure program under the proposed Digital Asset Tax Certainty Act. Section 502 of the proposed act, as referenced in the reporting via earlier Cointelegraph coverage, would establish a process for correcting past violations with defined penalties. The bill is positioned to cover crypto taxpayers, including those who made unintentional reporting errors, rather than focusing solely on willful noncompliance. The bill cleared the House Ways and Means Committee in September, according to the source materials. If the proposal advances, it could reduce ambiguity for taxpayers whose conduct does not fit the willfulness-focused design of the IRS program. This creates a policy tension worth watching: the IRS update appears geared toward changing how the current program functions—speed and penalty levels—while Congress could offer a separate compliance track tailored to digital asset reporting, including accidental errors. For taxpayers, the availability of two potential pathways—one administrative through the IRS and one potentially legislative—could significantly affect strategy, depending on whether their situation involves willful failure or unintentional misreporting. Taxpayers with crypto exposure should watch whether the IRS publishes concrete details before December, especially eligibility criteria, the scope of substantially lower penalties, and how installment plans or offers in compromise would work in practice. Readers should also monitor legislative progress on the Digital Asset Tax Certainty Act, since a separate crypto-specific corrective process could materially change the choices available to those dealing with past mistakes. This article was originally published as IRS to Ease Tax Disclosure Penalties, Including Crypto Reporting: Forbes on Crypto Breaking News – your trusted source for crypto news, Bitcoin news, and blockchain updates.