IRS to Ease Tax Disclosure Penalties, Including Crypto Reporting: Forbes

The U.S. Internal Revenue Service (IRS) is working on a substantial update to its voluntary disclosure program, with plans to cut penalties and speed up case resolution for taxpayers who come forward to address tax violations—an approach that would also cover cryptocurrency-related noncompliance. The changes were reported by Forbes in a Friday piece outlining remarks from senior IRS leadership.

Jarod Koopman, the chief of IRS Criminal Investigation, said the agency intends to introduce a revised version of the program before December. He added that the IRS is targeting resolution within 120 days after a taxpayer completes the required submission process.

Key takeaways

• The IRS plans to revise its voluntary disclosure program before December, aiming to resolve cases within 120 days of submission completion.
• According to Jarod Koopman, digital assets would be handled under the same voluntary disclosure framework as other types of tax noncompliance, not via a separate crypto-specific process.
• Koopman indicated the revised penalties would be “substantially lower” than current levels, though specific amounts were not provided.
• The IRS is reportedly considering expanded settlement options, including installment plans and offers in compromise.
• Legislators are also weighing a separate crypto-focused disclosure pathway under the Digital Asset Tax Certainty Act, which would address unintentional errors with defined penalties.

A faster pathway for taxpayers who come forward

For the IRS, the voluntary disclosure program is designed primarily for taxpayers facing exposure to criminal prosecution due to willful failure to comply with tax laws. Forbes reported that the current process can take a year or longer to complete, and that the IRS is seeking to streamline outcomes for eligible participants.

Koopman’s remarks at the UCLA Extension Tax Controversy Conference outlined the intent to move away from drawn-out timelines. Under the proposed approach, taxpayers would submit the required materials through the disclosure process, and then the IRS would work toward resolution within 120 days after the submission is completed.

For investors, traders, and builders interacting with crypto markets, the practical significance lies in predictability. Tax enforcement decisions often hinge not just on what happened, but on how quickly parties can resolve exposure. A shorter resolution window can reduce uncertainty for taxpayers who are trying to close out compliance gaps and avoid escalating disputes.

Digital assets likely stay inside the existing IRS framework

While crypto tax compliance is a recurring issue in U.S. policy discussions, Koopman indicated the IRS does not plan to create a separate disclosure procedure specifically for digital assets. Instead, Forbes reported that digital assets would be treated through the same voluntary disclosure procedures used for other forms of tax noncompliance.

That distinction matters because the IRS voluntary disclosure program is not framed as a catch-all mechanism for every kind of reporting problem. According to the reporting, the program is aimed at willful failures—rather than unintentional mistakes—meaning taxpayers’ eligibility depends on the facts that surround their reporting decisions.

Koopman’s comments also suggest the IRS is looking for operational reform—lower penalties, quicker timelines, and potential settlement flexibility—rather than redefining the underlying category of behavior that qualifies for relief.

Lower penalties and possible settlement flexibility

Koopman reportedly said penalties under the revised program would be “substantially lower” than those currently imposed. He did not provide numerical figures, so taxpayers should treat the statement as directional rather than specific guidance on what a particular case would cost.

Forbes also reported that the IRS is considering whether taxpayers could settle outstanding liabilities using installment plans or offers in compromise. If adopted, these options could be meaningful for crypto-related taxpayers whose liabilities may 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 of travel points to a more negotiable compliance experience. For eligible taxpayers, this 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.

Specifically, Section 502 of the proposed act, as referenced in the reporting via earlier coverage from Cointelegraph, 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.

According to the description in the source materials, the bill cleared the House Ways and Means Committee in September. 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, in parallel, offer a separate compliance track tailored to digital asset reporting, including accidental errors. For taxpayers, the availability of two potential pathways—one administrative via the IRS and one potentially legislative—could significantly affect strategy, depending on whether their situation aligns with willful failure or unintentional misreporting.

What to watch next

Taxpayers with crypto exposure should pay close attention to 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. At the same time, readers should monitor the Digital Asset Tax Certainty Act’s legislative progress, since a separate crypto-specific corrective process could materially change the choices available to those dealing with past mistakes.