IRS Targets Resolving Tax Disclosures Within 120 Days, Promises Lower Penalties
Key Facts
The Internal Revenue Service aims to resolve voluntary disclosure cases within a maximum of 120 days after taxpayers complete the required document submissions, Forbes reported, citing official Koopman. Koopman said penalties under the revised program would be much lower than their current level, without specifying rates or amounts. The proposed change concerns the general tax disclosure practice, which addresses willful violations that may carry criminal exposure. The practice covers individuals and entities, while digital-asset transactions enter the same process. “We are not going to create a separate workstream for digital assets,” Koopman said. The IRS did not say the update applies only to cryptocurrencies or gives investors automatic immunity from prosecution.
The promise of lower penalties reported by Forbes differs from the specific details in the proposed framework published by the IRS. For amended returns, the framework sets a 20% accuracy penalty for each year. After conditional approval, taxpayers must submit delinquent or amended returns or reports and pay taxes, penalties and interest in full within three months. The published framework therefore does not establish that installment payments will be available, although Forbes reported that the agency is considering installment plans and settlements. A failure-to-file penalty applies to delinquent returns for each year within the disclosure period, while the failure-to-pay penalty does not apply. The penalty for a late or amended international information return may also reach $10,000 per return for each year.
The disclosure period, under the general rule published by the IRS, covers the most recent six years of amended or delinquent returns or reports. This sets a time frame for the information that should be included in the resolution process, along with taxes, penalties and interest owed. The agency says the disclosure practice is intended for those who willfully failed to comply and may help limit criminal exposure. But it clarifies that disclosure “does not automatically guarantee immunity from prosecution.” For those who made an unintentional error in filing a return, the agency recommends considering alternatives, including filing amended or delinquent returns. Whether the failure was willful therefore remains a determining factor in identifying the appropriate process.
The update process traces back to a formal proposal launched by the IRS on December 22, 2025, when it opened a 90-day public comment period that ended on March 22, 2026. The proposals included a more standardized penalty framework, while the agency said the revised procedures, if adopted, are expected to take effect six months after the final terms are published. In July 2026, Bloomberg Law reported that the agency was working to update the program while taking digital-asset transactions into account. The report cited tax specialists who said participation in the program is generally low, particularly among taxpayers with digital-asset transactions. This context places the promise of reduced penalties and faster resolution within an effort to revise an existing process, rather than create a cryptocurrency-specific program. Koopman’s statement did not specify when the final terms would be published or when the changes would take effect.
Separately, the Federal Reserve will hold its next meeting on October 27 and 28, 2026, with minutes to be published on November 18. The Associated Press said most central bank officials saw another rate hike during the year as likely to counter inflation. By contrast, the report said investors expected rates to remain unchanged at the October meeting and then rise in December. The expectations cited in the report do not support the previous draft’s estimate of a rate cut to 4%. The meeting and minutes remain upcoming milestones on the U.S. monetary policy calendar. The source does not link the rate decision to the tax disclosure process or digital-asset market liquidity.