The changes could materially alter the calculation for taxpayers with undisclosed crypto income or gains who face potential criminal exposure. The current process can take a year or longer, while the revised framework is intended to reach resolution within 120 days after taxpayers complete the required submission process.
The IRS has not yet disclosed the new penalty rates, making the size of the financial relief one of the most important unresolved details.
Who Would the Revised IRS Disclosure Program Cover?
The IRS Voluntary Disclosure Practice is primarily designed for taxpayers whose failure to comply with tax law was willful and could expose them to criminal prosecution. It is not simply an amnesty program for ordinary filing mistakes.
Taxpayers entering the process must make a truthful and complete disclosure and cooperate with the IRS in determining the amount owed. A voluntary disclosure can reduce criminal-prosecution risk, but participation does not automatically guarantee immunity.
Crypto would remain inside that general framework. That means the planned overhaul would not create a special route solely for unreported Bitcoin gains, exchange transactions, staking income or other digital-asset activity.
The distinction is increasingly relevant because the IRS is receiving more transaction information directly from digital-asset brokers. FinanceFeeds previously examined how Form 1099-DA and the new cost-basis rules expand crypto reporting to the IRS, reducing the information gap between taxpayer filings and broker records.
Investor Takeaway
The overhaul could make voluntary disclosure less costly and substantially faster, but it remains aimed at willful noncompliance rather than functioning as a general correction program for every crypto tax mistake.
How Much Could IRS Penalties Fall?
Koopman indicated that penalties under the revised program would be substantially lower than those imposed under the current environment but did not provide percentages or dollar amounts.
That missing figure matters because penalties are one of the main costs taxpayers weigh when deciding whether to disclose misconduct before the IRS discovers it independently.
The agency is also considering more flexible ways to resolve unpaid liabilities, including installment plans and offers in compromise. Those options could allow qualifying taxpayers to spread payments over time or settle an outstanding liability for an agreed amount rather than paying everything immediately.
The final terms have not been released, so taxpayers cannot yet assume that the 120-day target, lower penalties or expanded payment options apply to existing cases.
The timing also overlaps with a broader tightening of digital-asset tax reporting. FinanceFeeds recently detailed the phased expansion of federal crypto reporting requirements, including gross-proceeds reporting and the introduction of broker cost-basis reporting for covered assets acquired from 2026.
How Is Congress’ Crypto Disclosure Proposal Different?
A separate disclosure route is advancing through Congress under Section 502 of the Digital Asset Tax Certainty Act, H.R. 10357.
The House Ways and Means Committee voted 38-5 in September to advance the legislation. FinanceFeeds previously reported that the bill would require the Treasury Department to establish a Digital Asset Voluntary Disclosure Program within 12 months of enactment, allowing eligible taxpayers to amend earlier returns and resolve outstanding tax, interest and program penalties.
The congressional proposal and the IRS overhaul therefore address overlapping but different problems. The IRS program is an existing criminal-compliance route focused on willful violations. Section 502 would create a dedicated statutory process for digital-asset tax problems with defined penalty treatment, including a lower-penalty track for taxpayers able to certify that their violations were not fraudulent or willful.
H.R. 10357 has not become law. It still requires approval by the full House and Senate and the president’s signature.
Investor Takeaway
Crypto taxpayers could eventually face two different compliance routes: a faster IRS program for willful violations and a congressional digital-asset program with separate treatment for non-willful mistakes.
Why Does the 120-Day Target Matter for Crypto Holders?
Faster resolution becomes more important as crypto tax records grow more complex. Traders may have transactions spread across centralized exchanges, self-custody wallets and decentralized protocols, while broker reporting captures only part of that activity.
A taxpayer entering voluntary disclosure may therefore need to reconstruct years of transaction history before the IRS can determine the tax, interest and penalties owed.
The planned 120-day target would shorten the period of uncertainty once that submission process is complete. Lower penalties could also increase the incentive to come forward before an IRS examination or investigation begins.
The decisive details are still missing. The IRS must publish the final penalty structure, eligibility terms, payment options and effective date before taxpayers can compare the revised program with existing procedures or the proposed congressional alternative.
For crypto holders with past reporting problems, the important distinction is therefore not simply whether the IRS is offering relief. It is whether the violation was willful, which program applies and what financial protections are actually available when the final rules take effect.