2026 IRS Voluntary Disclosure Program (VDP): Key Insights for Domestic and International U.S. Taxpayers

The IRS’ Voluntary Disclosure Program (VDP) remains open in 2026. While the IRS has proposed changes that could impact voluntary disclosures later this year, for now, the rules that were in place in 2025 remain intact. If you are considering a voluntary disclosure in 2026, learn what you need to know from Maryland tax lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors:

The VDP is an Option for Resolving Willful Tax Law Violations

Submitting a voluntary disclosure is an option for taxpayers who have committed willful tax law violations and who want to proactively resolve their tax controversies with the IRS. If you need to correct an inadvertent filing error, you have options available, but filing under the VDP isn’t one of them. Some of the most common reasons why taxpayers use the VDP are to avoid criminal prosecution for willful violations, such as:

• Failure to file federal tax returns
• Failure to report taxable income to the IRS
• Underpayment of ordinary or capital gains tax
• Nondisclosure of offshore accounts
• Nondisclosure of other foreign financial assets

When submitting a voluntary disclosure, taxpayers must generally be prepared to pay what they owe. The purpose of filing under the VDP is to mitigate taxpayers’ exposure to additional criminal penalties. The IRS makes this clear, stating:

“[The VDP] requires you to . . . [c]ooperate with the IRS in determining your correct tax liability, and [p]ay in full or secure a full-pay installment agreement . . . .”

As the IRS also makes clear, “[a] voluntary disclosure will not automatically guarantee immunity from prosecution; however, a voluntary disclosure may result in prosecution not being recommended.” As a result, before coming forward, it is critical for taxpayers to do what they can to ensure that participating in the VDP will not lead to a federal indictment. This is one of many areas where an experienced Maryland tax lawyer will be able to help.

Strict Eligibility, Timing, and Filing Requirements Apply

Along with applying specifically to willful tax law violations, the VDP has other strict eligibility, timing, and filing requirements as well. Some examples of these requirements include:

• The taxpayer must not be the subject of an active audit or investigation;
• The taxpayer must file Part 1 of IRS Form 14457 along with all required supporting documentation;
• After this initial filing, the taxpayer must receive preclearance from the IRS to continue in the VDP;
• If precleared, the taxpayer must submit Part 2 of IRS Form 14457 within 45 days (or request a one-time extension); and,
• The taxpayer must be prepared to enter into an agreement with the IRS to resolve their tax controversy.

Here too, taxpayers must ensure that they are making informed decisions, and if they decide to make a voluntary disclosure, they must remain in close contact with their legal counsel as their legal counsel works with the IRS on their behalf. If you need to know more, we encourage you to contact us for a confidential consultation today.

Request a Confidential Consultation with Maryland Tax Lawyer Kevin E. Thorn

To request a confidential consultation with Maryland tax lawyer Kevin E. Thorn, Managing Partner of U.S. International Tax Advisors, please call 240-235-5096 or contact us online. We will arrange for you to speak with Mr. Thorn in strict confidence as soon as possible.