Big Changes Could Be Coming to the IRS’ Voluntary Disclosure Program (VDP) in 2026

The Internal Revenue Service (IRS) has proposed several changes to its Voluntary Disclosure Program (VDP) that could potentially take effect later this year. If they do, they could have a significant impact on taxpayers’ decisions regarding whether to submit voluntary disclosures, as well as taxpayers’ ability to avoid criminal prosecution through the program. Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, explains:

IRS Proposes Several Big Changes to the VDP

The IRS announced its proposed changes to the VDP on December 22, 2025. The proposed changes are currently subject to a 90-day public comment period, which closes on March 22, 2026. Once the public comment period closes, the IRS can finalize the changes; and, in its announcement, the IRS stated that it expects the changes, “to take effect six months after publication of the final terms.”

So, what might be changing?

The IRS’ proposal addresses both substantive and procedural aspects of the Voluntary Disclosure Program (VDP). Some of the key changes that could take effect in 2026 include:

• New disclosure requirements in taxpayers’ VDP applications;
• New conditions for participating in the VDP;
• New filing requirements once taxpayers receive the IRS’ “preclearance” to participate in the VDP;
• New specifications regarding the penalties that taxpayers are required to pay when participating in the VDP; and,
• A new three-month deadline for reaching an agreement with the IRS and paying in full once a taxpayer is precleared.

Taken together, these proposals could both make it more challenging for taxpayers to submit successful voluntary disclosures and prevent taxpayers from using the VDP if they are unable to timely pay in full. Under the current terms of the VDP, taxpayers may enter into a full-pay installment agreement with the IRS upon finalizing their participation in the program.

When Should Taxpayers Submit Voluntary Disclosures to the IRS?

In light of these proposed changes, when should taxpayers consider submitting voluntary disclosures to the IRS in 2026?

Ultimately, this analysis doesn’t change. One of the current requirements for submitting an application under the VDP is that the taxpayer is not subject to a pending IRS audit or investigation. Once the IRS opens an inquiry, submitting a voluntary disclosure is no longer an option. Since participating in the VDP provides a way for taxpayers to avoid criminal fines and prison time for willful tax law violations (though immunity from prosecution is not guaranteed), taxpayers who are eligible to file should not wait any longer than necessary to decide how best to proceed.  

Discuss Your Options with Virginia Criminal Tax Attorney Kevin E. Thorn in Confidence

If you need to know more about VDP eligibility or any other aspect of the IRS’ Voluntary Disclosure Program, we invite you to get in touch. To discuss your options with Virginia criminal tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, in confidence, call  703-752-3752 or request a consultation online today.