IRS Disclosure Programs: What’s Changing and Why it Matters

In late 2025, Guy Ficco, Chief of Criminal Investigation at the Internal Revenue Service, announced that the IRS plans to make changes to its Voluntary Disclosure Practice (“VDP”), a procedure by which taxpayers can correct past intentional tax incidents. Ficco’s comments remind us that the IRS’s core disclosure programs and the procedures governing them remain subject to change. Given the IRS’ stated intention to revise its disclosure procedures for the VDP, taxpayers with unresolved issues may benefit from evaluating disclosure options now, before IRS program requirements, penalties, or eligibility standards change.

The IRS’ Voluntary Disclosure Practice

A voluntary disclosure occurs when a taxpayer provides a truthful, timely, and complete disclosure of previous noncompliance, prior to an IRS civil or criminal investigation. The VDP is a compliance option for taxpayers that have willfully failed to comply with tax and who may have criminal exposure due to willful violations of the law. It is a longstanding practice of IRS Criminal Investigation, and while a voluntary disclosure from a taxpayer does not automatically guarantee immunity from prosecution, it can result in the IRS recommending the taxpayer not be prosecuted.

The VDP is generally appropriate in situations involving:

• Knowingly underreported income;
• Filing false/misleading returns;
• Intentional failure to file required returns; and
• Willful offshore reporting violations.

Other Voluntary Disclosure Options for Non-Willful Conduct

Most IRS disclosure issues do not involve willful or criminal intent, but can still contain multiple years, large balances, and complex reporting requirements. For many taxpayers, it is important to determine which disclosure pathway might work best, especially as IRS procedures continue to change.

Foreign bank account and asset reporting is an active area of IRS enforcement and disclosure. U.S. taxpayers with foreign bank accounts exceeding $10,000 in aggregate value at any time during the year must report the accounts by filing a Report of Foreign Bank and Financial Accounts (FBAR) on Financial Crimes Enforcement Network (FinCEN) Form 114. Failure to comply can result in significant penalties, even when the failure was non-willful. Moreover, certain U.S. taxpayers holding foreign financial assets with an aggregate value of $50,000 must report those assets on Form 8938, Statement of Specified Foreign Financial Assets.

Depending on the facts, failure to comply with foreign filing requirements may be addressed through the following IRS disclosure programs:

• Streamlined Filing Compliance Procedures for individual taxpayers who failed to report income, pay tax, or file required returns;
• Delinquent FBAR Submissions Procedures for taxpayers who failed to file a required FBAR; and
• Delinquent International Information Return Submission Procedures for taxpayers who failed to file certain international information returns.

In an environment of expanded IRS enforcement through modern technology and AI, addressing past noncompliance on a voluntary basis can enable taxpayers to address their actions, limit or eliminate penalties, and bring themselves back into full compliance. 

Managing Risk

Ficco’s comments highlight that disclosure programs are policy tools the IRS continuously evaluates and revises, and taxpayers should understand that relying on outdated IRS guidance may lead to significant costs. Additionally, timely disclosure is critical, as most IRS disclosure programs are not available once the IRS has initiated an audit or investigation.

In a constantly changing IRS landscape, EisnerAmper’s Tax Controversy & Dispute Resolution team is a critical resource for taxpayers seeking full compliance. EisnerAmper closely monitors IRS enforcement trends and works with clients to identify available disclosure pathways and minimize potential exposure.

Contact our team below if you have any questions or need assistance with a potential disclosure.