Improve the IRS’s Criminal Voluntary Disclosure Practice

TAS is reviewing how to incorporate this initiative into an existing or new Collaborative Team, a Systemic Advocacy Project, or a potential FY 2025 Annual Report to Congress Most Serious Problem. Progress during this period was affected by the lapse in appropriations and related operational impacts, including reduced staffing capacity, reassignment of work and priorities, and a reevaluation of TAS’s approach to managing systemic advocacy objectives and associated initiatives.

The IRS conducted a comprehensive review of the Voluntary Disclosure Practice (VDP) with stakeholder input to evaluate whether the program effectively promotes compliance among taxpayers with potential criminal liability. The IRS also indicated it is considering adjustments related to income derived from marijuana sales. TAS will continue to monitor and advocate for continued stakeholder engagement, changes that improve accessibility and changes that reduce administrative barriers to VDP participation.

The IRS continued reviewing proposed revisions to the Criminal Voluntary Disclosure Practice (VDP) following the close of the public comment period. The IRS solicited and received feedback from taxpayers, practitioners, and stakeholder organizations regarding the proposed changes. TAS actively participated during the comment period by identifying taxpayer concerns, publishing outreach materials, and encouraging stakeholders to provide feedback directly to the IRS.

Although the IRS received numerous public comments, it has not yet issued a formal response, announced whether it will adopt specific recommendations, or published final VDP procedures. As the proposal remains under review, continued monitoring will be important to evaluate how any final changes may affect taxpayer compliance, program accessibility, and administrative burden.

TAS will continue monitoring the IRS’s review of the proposed VDP revisions, evaluate future guidance and procedural changes, assess their potential impact on taxpayers, and determine whether additional advocacy is warranted once the IRS announces its final decisions.

TAS is reviewing how to incorporate this initiative into an existing or new Collaborative Team, a Systemic Advocacy Project, or a potential FY 2025 Annual Report to Congress Most Serious Problem. Progress during this period was affected by the lapse in appropriations and related operational impacts, including reduced staffing capacity, reassignment of work and priorities, and a reevaluation of TAS’s approach to managing systemic advocacy objectives and associated initiatives.

Since the beginning of FY26, the IRS has taken steps toward simplifying the Voluntary Disclosure Practice (VDP) application process. Most notably, the IRS removed the “willfulness” checkbox from Form 14457, addressing a longstanding concern that the requirement may have discouraged participation and created confusion for taxpayers seeking to come into compliance. The IRS has also sought public comment on additional proposed reforms, including electronic submission of Form 14457, standardized procedures, and clearer processing requirements designed to improve transparency and consistency throughout the program.

While these actions represent progress toward a more user-friendly VDP, the proposed changes have not yet been finalized or fully implemented. TAS will continue to monitor the IRS’s efforts to simplify the application process and identify opportunities to improve taxpayer understanding, participation, and voluntary compliance.

The IRS continues to evaluate the proposed revisions and public comment to simplify the Voluntary Disclosure Practice (VDP) application process. The proposed changes include a revised penalty framework, electronic submission of Form 14457, standardized procedures, and clearer processing requirements designed to improve transparency, consistency, and taxpayer participation.

Although these proposed changes represent continued progress toward a more streamlined and accessible VDP, the IRS has not yet finalized or implemented the revisions.

TAS will continue monitoring the IRS’s efforts to simplify the VDP application process and identify opportunities to improve taxpayer understanding, increase participation, and promote voluntary compliance.