What Are the Proposed Changes to the IRS’ Voluntary Disclosure Program (VDP) in 2026?

Just before the end of 2025, the Internal Revenue Service (IRS) announced several proposed changes to its Voluntary Disclosure Program (VDP). The proposed changes are subject to public comment through March 22, 2026, and, if finalized, they could take effect before the end of the year. Learn what taxpayers should know about the proposed changes from New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group:

IRS Proposes Several Important Changes to the VDP

The IRS’ proposal would make several important changes to its longstanding Voluntary Disclosure Program (VDP). The VDP provides a pathway for eligible U.S. taxpayers to resolve willful tax law violations with the IRS, and while participation in the VDP is already subject to stringent requirements, the IRS’ proposed changes would establish additional requirements for avoiding criminal prosecution.

If the IRS’ proposed changes are finalized, the requirements for avoiding criminal prosecution through the voluntary disclosure process would include:

• Identifying “all years of noncompliance and provid[ing] a full and accurate description of the taxpayer’s willful noncompliance,” when taxpayers file their VDP applications with the IRS;
• Agreeing to waive all applicable statutes of limitations and signing an FBAR agreement, if applicable;
• Filing all required amended and delinquent income tax returns, international information returns (i.e., IRS Form 8938), and FBARs;
• Paying all applicable taxes, interest, and penalties “in full” and,
• Executing an agreement with the IRS to finalize the terms of a taxpayer’s participation in the VDP.

The IRS is also proposing a 3-month deadline to finalize a taxpayer’s participation in the VDP after the taxpayer receives conditional approval. This deadline would apply to filing all required returns and FBARs, paying all amounts due, and entering into a settlement agreement with the IRS. As is currently the case under the VDP, if a taxpayer fails to timely comply with the program’s requirements, the IRS could rescind the taxpayer’s conditional approval; and, in this scenario, the taxpayer “may be subject to full examination and all applicable civil and criminal penalties.”

Under the current terms of the VDP, there is no absolute deadline to complete the voluntary disclosure process, and taxpayers have the option of entering into a full-pay installment agreement for the amounts they owe. If the IRS’ proposed three-month deadline becomes final, this option would effectively go off the table.

Should You Submit a Voluntary Disclosure in 2026?

For taxpayers who have willfully violated federal law, submitting a voluntary disclosure can be a viable solution to their federal tax controversy. However, strict eligibility criteria apply, and taxpayers must be prepared to work with the IRS to determine their correct liability and then pay what they owe. As a result, informed decision-making is critical, and making an informed decision starts with engaging an experienced criminal tax lawyer.

Schedule a Confidential Consultation with New Jersey Criminal Tax Lawyer Kevin E. Thorn

Do you need to know more about utilizing the IRS’ Voluntary Disclosure Program (VDP) in 2026? If so, contact us today. Call 201-842-7696 or contact us online to schedule a confidential consultation with New Jersey criminal tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.