Changes to the Internal Revenue Service's ("IRS") voluntary disclosure program ("VDP") are coming. On December 22, 2025, the IRS announced proposed changes and opened a 90-day public comment period (which ended March 22, 2026).1 While there is no timetable for the announcement of final changes, the announcement states that the new procedures are expected to be effective six months after the changes are finalized.
For those accepted into the VDP, the IRS will not recommend criminal prosecution for those who voluntarily disclose their willful failure to comply with tax or tax-related obligations. The program has been around since the 1950's, and is intended only for taxpayers whose failures were willful with the potential assertion of criminal penalties. Taxpayers who have non-willful failures are encouraged to explore other options for becoming complaint, including Streamlined Filing Compliance Procedures, delinquent return and FBAR submissions, or filing amended tax returns.2
The proposed changes to the VDP are intended to increase clarity and consistency of the program. In so doing, the proposal includes significant changes to the timing and to the payment requirements for participating in the VDP. (There are other changes as well, including significant changes to the penalty structure.)
Under the current program, the process includes: (1) filing for "preclearance" into the VDP (which entails a taxpayer affirmatively disclosing they may have a compliance issue); (2) preliminary acceptance into the program (which includes the IRS conducting a more detailed and substantive check of taxpayer eligibility for the program); and (3) assignment to a civil tax examiner with whom the taxpayer may file up to six years of (corrected) returns, undergo a civil examination, and pay all taxes, penalties, and interest due and owing.3 Preliminary acceptance must be sought within 45 days (with one possible 45-day extension) of notice of preclearance.4 There is no set timing for the filing of delinquent or amended returns or payment of tax, interest, and penalties. While the full amount of tax, interest, and penalties must be paid, an installment agreement is an option for taxpayers who cannot pay their entire liability at once.5
The proposed changes condense the preclearance and preliminary acceptance steps into a single "conditional approval" step.6 Moreover, if conditional approval is received, the taxpayer will have three months to file all required returns and pay all amounts due.7 Rather than working with an examiner to ensure that the amended or delinquent returns are accurate and that the payment amount is correct, and potentially reaching an installment payment agreement, the onus will be entirely on the taxpayer to submit the returns and payment—in a relatively short period of time.
Practice Point
If taxpayers are noncompliant, they should confer with knowledgeable counsel as to whether VDP is appropriate. If the VDP is the appropriate process and the program is updated as proposed, it will be essential that before seeking VDP, the taxpayer have all the returns already corrected and determine how and when it can pay any and all liabilities. Having everything ready before filing should ensure a smoother transition into compliance. If you are thinking about seeking VDP, there also are important Fifth Amendment considerations to the decision which should be examined with the assistance of legal counsel who is familiar with the VDP program.
1 IR-2025-124.
2 See Frequently Asked Questions, available at https://www.irs.gov/compliance/criminal-investigation/irs-criminal-investigation-voluntary-disclosure-practice.
3 See Frequently Asked Questions; Instructions to Form 14457.
4 Instructions to Form 14457.
5 Instructions to Form 14457.
6 IR-2025-124.
7 IR-2025-124.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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