An In-Depth Guide to IRS Voluntary Disclosures in New York: 2026 IRS Voluntary Disclosure Program

Published by New York Tax Attorneys and Former IRS Attorneys

An Exclusive Insight into the 2026 IRS Voluntary Disclosure Program!

Kevin E. Thorn, Managing Partner of the Thorn Law Group, a New York tax attorney is widely recognized as a top expert in the United States on IRS Voluntary Disclosures and the analysis of foreign financial assets. With over 25 years of experience, Thorn Law Group, TLG or the Firm’s tax attorneys have handled numerous cases under the IRS Voluntary Disclosure Program (VDP), achieving successful outcomes before the IRS, IRS Appeals, IRS Criminal Division (CI), United States Tax Court, and various Federal courts nationwide on behalf of their clients.

Mr. Thorn can be contacted directly at (914) 534-6004 or ket@thornlawgroup.com.

Kevin E. Thorn and his firm are renowned for their expertise in navigating the IRS Voluntary Disclosure Programs, assisting clients across the U.S. as well as internationally with both civil and criminal tax matters. Their client base is extensive and varied, including small to medium-sized businesses, high-net-worth individuals, and a wide array of professionals, such as CEOs, financial executives, government officials, legal professionals, CPAs, athletes, and actors. The firm also represents banks, trusts, foreign foundations, insurers, cryptocurrency holders, and other notable clients. 

In 2026, Thorn Law Group successfully managed offshore and streamlined voluntary disclosure cases involving both individuals and large entities, such as domestic and international banks, insurers, trusts, asset managers, and investment funds. These cases often involve disclosing offshore assets, including bank accounts, insurance policies, hedge funds, stocks, cryptocurrency, precious metals, and other foreign holdings. Their strategic approach and track record of resolving complex tax issues have earned them a strong reputation worldwide.

Understanding the 2026 IRS Offshore Voluntary Disclosure Program (OVDP) and How a New York Tax Attorney Can Assist

The 2026 IRS Offshore Voluntary Disclosure Program (OVDP) offers eligible U.S. taxpayers the opportunity to comply with U.S. tax laws, avoiding severe IRS civil audits or criminal investigations. U.S. law mandates that taxpayers who possess foreign (or "offshore") bank accounts or other financial assets abroad must disclose these to the IRS. Failure to disclose can result in significant civil or criminal penalties if discovered during an IRS tax audit, offshore bank investigation, or account audit.

The 2026 IRS Voluntary Disclosure Program (VDP) permits taxpayers who previously failed to disclose offshore accounts or assets to come forward without triggering an IRS audit or criminal probe. While penalties cannot be entirely avoided, participants can substantially reduce financial liabilities and eliminate the risk of criminal prosecution by engaging the experienced New York State tax attorney and former IRS lawyer, Kevin E. Thorn of the Thorn Law Group.

Key changes from the 2018 iteration of the IRS Voluntary Disclosure Program continue under the 2026 version managed by the IRS Criminal Investigation Division. The IRS has also adopted the 2014 Streamlined Filing Compliance Procedures, which many U.S. taxpayers can utilize to catch up on foreign account disclosures. Given the intricate nature of the 2026 IRS Voluntary Disclosure Program and prior versions (OVDP, VDP, IRS Streamlined Procedures, etc.), consulting with an experienced former IRS tax attorney and New York tax attorney with experience across these various IRS disclosure programs is strongly advised.

This "2026 In-Depth Guide to IRS Voluntary Disclosures” comprehensively covers everything that U.S. citizens, foreign U.S. taxpayers, and green card holders need to understand about OVDP, VDP, Streamlined Voluntary Disclosures, and other program nuances. For personalized advice regarding your offshore account disclosure obligations, we encourage you to contact us promptly for a confidential consultation. At Thorn Law Group, our attorneys have handled thousands of IRS Voluntary Disclosures across nearly every U.S. state, saving taxpayers—both U.S. and non-U.S.—billions of dollars in taxes, penalties, and interest.

Exploring the Origins and History of the IRS Offshore Voluntary Disclosure Program (OVDP)

The IRS introduced the initial versions of what is now recognized as the IRS Offshore Voluntary Disclosure Program in 2009, and it underwent several revisions until its conclusion in 2018. Following the official end of OVDP, the IRS has allowed U.S. taxpayers to voluntarily disclose previously undisclosed foreign accounts and financial assets through alternative means with the guidance of a knowledgeable IRS New York tax attorney. It's crucial to emphasize that failure to disclose an offshore bank account or foreign financial asset on your tax return and/or not filing a Foreign Bank Account Reporting Form (FBAR) is a serious offense that can result in substantial fines and potential imprisonment. Therefore, it is essential to retain the services of an experienced New York tax attorney to ensure attorney-client privilege is maintained and that your legal rights are safeguarded at all times.

The History of IRS Voluntary Disclosures:

2009: Introduction of the IRS Voluntary Disclosure Program

The original IRS OVDP operated from March to October 2009, receiving over 15,000 voluntary disclosures from U.S. taxpayers, yielding billions in recovered taxes, penalties, and interest. Participants could avoid further scrutiny by paying all back taxes, interest, an accuracy-related penalty, and an additional "miscellaneous" penalty, which could reach up to 20% of the highest aggregate balance of their undisclosed offshore accounts over the previous six years. These penalties were particularly severe, considering that most taxpayers had simply made errors in reporting their offshore assets and failed to file an FBAR (Foreign Bank Account Reporting Form).

Prior to this program, the FBAR requirement was rarely enforced and was initially intended for national security against terrorism and drug trafficking. It later became a tool for tracking individuals and businesses not reporting foreign accounts or income. The volume and complexity of cases in the 2009 IRS Voluntary Disclosure Program required the expertise of highly capable New York tax litigation attorneys to guide clients through the process. Despite harsh penalties, successful resolution by experienced New York state tax lawyers like those at the Thorn  Law Group resulted in minimal incarcerations among thousands of clients.

2011: Revival of the IRS Voluntary Disclosure Program

In 2011, the IRS re-launched the OVDP as the Offshore Voluntary Disclosure Initiative (OVDI), similar to the original OVDP but with minor adjustments. The "miscellaneous" penalty increased to 25% for taxpayers with aggregate foreign account values exceeding $75,000 and decreased to 12.5% for those below this threshold. These adjustments added complexity to cases, making resolution more challenging even for skilled New York tax attorneys. The program's changes led to increased IRS audits, prolonged penalty disputes, and greater difficulty in achieving favorable outcomes for clients.

2012: Changes to the IRS Voluntary Disclosure Program

After the OVDI expired, the IRS reverted to the 2009 OVDP procedures in 2012, running it as an open-ended program for several years. By this time, New York and nearby region tax attorneys like  Thorn Law Grouphad gained significant experience in navigating these disclosure programs. With improved operational efficiency, cases were handled more expeditiously, and the government collected taxes, penalties, and interest more effectively. However, adjustments to the program, including raising the maximum "miscellaneous" penalty to 27.5%, created new challenges for resolution and led to prolonged case processing times.

2014: Introduction of the Streamlined and Disclosure Programs

In response to ongoing challenges, the IRS introduced significant changes in 2014, creating the IRS Streamlined Filing Compliance Procedures. This program offered reduced penalties, specifically a 5% penalty under certain conditions, as a separate option from traditional IRS Voluntary Disclosure Programs. Despite the lower penalty, participants lacked the protection of an IRS Form 906 Closing Agreement, leaving them vulnerable to future IRS scrutiny. This new program quickly gained popularity among taxpayers seeking to minimize penalties, leading to a surge in disclosures.

2018: Conclusion of the IRS Voluntary Disclosure Program

The OVDP officially closed in 2018 due to declining taxpayer participation. However, the IRS continued to receive voluntary disclosures through various disclosure programs, including the Streamlined Filing Compliance Procedures and IRS Criminal Investigation's Voluntary Disclosure Practice, which carries substantial penalties and is primarily used in potential criminal cases. These programs remain vital for taxpayers seeking to resolve tax compliance issues related to undisclosed offshore accounts and assets.

2026: Introduction of the IRS Voluntary Disclosure Program

As of today, the 2018 OVDP has been closed for several years, but U.S. taxpayers still have options to come into compliance voluntarily through programs like the IRS Streamlined Filing Compliance Procedures or IRS Voluntary Disclosure through the criminal division. These programs cater to different types of taxpayer situations, whether non-willful or willful violations of tax laws. It is crucial for taxpayers, including U.S. citizens, resident aliens, and green card holders, to consult experienced IRS Voluntary Disclosure tax attorneys such as Thron Law Group  before making any disclosures to ensure compliance and protect their legal interests. Each taxpayer's situation is unique, and tailored advice is essential to navigate the complexities of IRS disclosure programs effectively.

Understanding the 2026 IRS Offshore Voluntary Disclosure Program (OVDP): An Overview

Although the formal Offshore Voluntary Disclosure Program ended in 2018, the term "OVDP" is still widely used. In 2026, "OVDP" may refer to the IRS's Streamlined Filing Compliance Procedures, IRS Criminal Investigation's Voluntary Disclosure Practice (VDP), or both.

However, despite often being grouped together, the IRS's Streamlined Filing Compliance Procedures and the VDP are distinct programs with unique eligibility criteria and potential consequences for non-compliance. Each program imposes specific penalties and conditions. Therefore, taxpayers with undisclosed foreign financial assets should seek guidance from an experienced New York IRS Criminal Tax Voluntary Disclosure attorney to navigate their unique circumstances and achieve the best possible outcome.

What Are the 2026 IRS Voluntary Disclosure Streamlined Filing Compliance Procedures?

The IRS's Streamlined Filing Compliance Procedures have become the principal alternative to the IRS OVDP. According to the IRS, "[t]he streamlined filing compliance procedures . . . are available to taxpayers certifying that their failure to report foreign financial assets and pay all tax due in respect of those assets did not result from willful conduct on their part." These procedures have been in effect since 2012 and have contributed to the notable decline in OVDP filings since 2011.

 The Streamlined Filing Compliance Procedures ("Streamlined Procedures") are specifically designed for individual taxpayers and estates of individual taxpayers. Both U.S. taxpayers residing domestically and those living abroad can utilize these procedures, although there are differing filing requirements for taxpayers residing overseas. However, regardless of residency, the fundamental eligibility criteria remain consistent:

• The taxpayer must certify under penalties of perjury that their failure to disclose offshore financial accounts was not willful.
• The taxpayer must not currently be under IRS audit or civil examination (whether related to offshore accounts or not).
• The taxpayer must possess a valid Social Security Number (SSN) or other valid Tax Identification Number (TIN).

Navigating these procedures effectively requires the assistance of an experienced New York IRS Voluntary Disclosure tax attorney who can provide guidance tailored to the taxpayer's specific circumstances, ensuring compliance and minimizing potential penalties.

How Does the IRS Streamlined Filing Compliance Procedures Differ from the 2026 IRS Offshore Voluntary Disclosure Program (OVDP)?

There are several significant distinctions between the former OVDP program and the current IRS Streamlined Filing Compliance Procedures, each with its own implications that vary in appeal.

Here are the key differences:

1. Scope of Eligibility:
   
   IRS Streamlined Procedures: Designed solely for taxpayers who committed non-willful violations by failing to disclose their foreign financial accounts. Taxpayers must certify that their non-disclosure was unintentional, and the IRS evaluates these certifications to determine eligibility.
   
   IRS OVDP: Previously allowed correction for both willful and non-willful violations, covering a broader range of taxpayer scenarios including corporations, partnerships, and trusts, in addition to individual taxpayers and their estates.
   
   
2. Penalty Structure:
   
   IRS Streamlined Procedures: Impose a maximum penalty of five percent of the value of undisclosed offshore accounts, significantly lower than the 50-percent maximum penalty under the final OVDP iteration. However, additional civil penalties may apply for unreported income from these accounts.
   
   IRS OVDP: Historically applied higher penalties, reflecting a more comprehensive approach to resolving tax non-compliance related to offshore accounts.
   
   
3. Criminal Prosecution Protection:
   
   IRS Streamlined Procedures: Do not offer protection from criminal prosecution. Taxpayers who file under these procedures may face criminal charges if the IRS determines their non-disclosure was willful, despite their certification otherwise.
   
   IRS OVDP: Provided participants with protection against criminal prosecution, making it a preferred choice for taxpayers seeking to mitigate both civil and criminal liabilities related to undisclosed offshore accounts.

Navigating these options requires the expertise of a New York IRS Criminal Tax Lawyer to ensure compliance and minimize potential consequences based on the specifics of each taxpayer's situation. This professional guidance is crucial to avoid inadvertent exposure to criminal charges and effectively resolve IRS compliance issues.

Distinguishing Between Willful and Non-Willful Conduct in the 2026 IRS Voluntary Disclosure Program

Understanding the distinction between willful and non-willful conduct is crucial in determining eligibility for the IRS’s Streamlined Filing Compliance Procedures.

1. Non-Willful Conduct:

• Non-willful conduct refers to inadvertent or unintentional violations of disclosing offshore accounts.
• In these cases, taxpayers were not aware of their obligation to disclose or mistakenly believed they were compliant.
• Taxpayers who can demonstrate their failure to disclose was not willful can utilize the IRS Streamlined Procedures to rectify their non-compliance.

2. Willful Conduct:

• Willful conduct occurs when a taxpayer is aware of their obligation to disclose offshore accounts but chooses not to do so.
• This includes situations where a taxpayer knowingly or recklessly disregards the requirement to report foreign financial assets.
• Even if a taxpayer claims ignorance, if they should have known about the reporting requirement, it can still be deemed willful.
• Taxpayers who have willfully failed to disclose their offshore accounts are ineligible for the IRS Streamlined Procedures and must consider options under the IRS Criminal Investigation’s Voluntary Disclosure Practice (VDP).

3. Consequences:

• Non-willful violations under the Streamlined Procedures typically incur a lower penalty of around 5% of the undisclosed account's highest balance.
• Willful violations, on the other hand, can lead to severe penalties exceeding 50% of the undisclosed account balance.
• Despite higher penalties, making a voluntary disclosure under the IRS VDP can mitigate the potential consequences of a willful violation, compared to facing an IRS audit or criminal investigation without voluntary disclosure.

What Qualifies as an Offshore Bank Account in the 2026 IRS Voluntary Disclosure and Streamlined Filing Compliance Procedures?

So far, we've explored the available avenues for U.S. taxpayers who haven't reported their offshore accounts to the IRS. However, we haven't specifically addressed the types of financial accounts that fall under either IRS program.

The requirement to report offshore accounts to the IRS is governed by the Foreign Account Tax Compliance Act (FATCA). According to FATCA, U.S. taxpayers must disclose all accounts held with foreign financial institutions that exceed certain total value thresholds. Foreign financial institutions include:

• Banks
• Mutual Funds
• Private Pensions
• Hedge funds and private equity funds
• Certain insurance companies offering cash-value products or annuities

It's important to note that the IRS excludes (i) foreign branches of U.S. banks and (ii) branches of foreign banks located within the United States from its definition of foreign financial institutions. 

If a U.S. taxpayer residing in New York holds one or more accounts with foreign financial institutions, they are obligated to disclose these accounts to the IRS if they meet any of the following thresholds:

• For Individual Taxpayers: Aggregate value exceeding $50,000 at the end of the tax year or exceeding $75,000 at any time during the tax year.
• For Married Taxpayers: Aggregate value exceeding $100,000 at the end of the tax year or exceeding $150,000 at any time during the tax year. 

Higher reporting thresholds apply to U.S. taxpayers living abroad ($200,000 aggregate value at the end of the tax year or $300,000 aggregate value at any point during the year for single filers, with double these amounts for married taxpayers filing jointly).

If any offshore account of a taxpayer meets a FATCA disclosure threshold, all offshore accounts of that taxpayer must be disclosed. For instance, if a taxpayer owns three offshore accounts with respective values of $40,000, $10,000, and $5,000 at the end of a tax year, all three accounts must be reported, despite the $5,000 account alone not exceeding the $50,000 aggregate disclosure threshold.

What Is Considered Tax Compliance Under the Current IRS Voluntary Disclosure Programs in 2026?

To be considered in compliance with New York state tax laws, taxpayers must annually disclose their qualifying offshore accounts in a timely manner. Taxpayers in New York must also rectify any previous non-disclosure issues—either through New York's Streamlined Filing Compliance Procedures or through voluntary disclosure programs managed by New York’s Department of Taxation and Finance.

Another crucial aspect of offshore disclosure compliance is New York's FBAR requirements. Alongside their obligations under state tax laws, many New York taxpayers must adhere to the Financial Crimes Enforcement Network’s (FinCEN) reporting requirements for Foreign Bank and Financial Accounts (FBAR) filing. Although similar reporting standards and thresholds apply universally, New York's FBAR filing obligations extend slightly beyond those mandated under state tax laws.

IRS Tax Compliance for Individual Taxpayers: FATCA vs. FBAR

The requirement to disclose offshore accounts applies to individuals categorized as 'specified individuals,' which encompasses taxpayers whose offshore accounts surpass the aggregate value thresholds mentioned earlier. The FBAR filing mandate applies to all U.S. citizens and resident aliens whose foreign financial accounts exceed $10,000 in aggregate value at any point during the calendar year.

Guidelines for New York Businesses to Maintain IRS Tax Compliance

FATCA also extends to 'specified domestic entities' with an interest in foreign financial accounts meeting the reporting threshold, encompassing various types of business entities. The reporting thresholds for businesses mirror those for individual taxpayers (i.e., exceeding $50,000 aggregate value at year-end or $75,000 aggregate value at any time during the year). Similarly, the FBAR filing obligation applies to domestic entities holding foreign financial accounts exceeding $10,000 in aggregate value at any point during the calendar year.

IRS Tax Compliance for Trusts

Trusts are classified as 'specified domestic entities' under FATCA regulations, and they share FBAR filing requirements with businesses. When evaluating a trust's compliance with both FATCA and FBAR filing obligations, it is crucial to engage a knowledgeable IRS tax lawyer in New York who can comprehend the intricacies of these regulatory disclosures and compliance standards.

IRS Tax Compliance for Foundations

Foundations, like trusts, are also categorized as 'specified domestic entities' and are subject to the same filing obligations as businesses under both FATCA and FBAR requirements. Once more, navigating these intricate government compliance and disclosure standards for FATCA and FBAR necessitates the expertise of an experienced New York tax attorney.

Information Required for Disclosure Under the 2026 IRS Voluntary Disclosure Programs

IRS Streamlined Filing Procedures

Submitting a voluntary disclosure under the IRS’s Streamlined Filing Compliance Procedures (which replaced the OVDP for non-willful violations) is a complex process. Taxpayers must complete various forms and accurately report required information for each type of asset they need to disclose. This includes (where applicable):

• Bank Accounts (Checking and Savings)
• Insurance Policies
• Foreign Mutual Funds
• Stocks, Bonds, and Investments in Hedge Funds
• Pensions

Domestic IRS Streamlined Filing Procedures

For U.S. taxpayers residing within the country, the forms, information, and payments required for an IRS voluntary disclosure under the Streamlined Procedures include:

• IRS Form 1040X, Amended U.S. Individual Income Tax Return
• Any necessary information returns (e.g., IRS Forms 3520, 3520-A, 5471, 5472, 8938, 926, and 8621)
• Writing “Streamlined Domestic Offshore” in red at the top of the first page of each return
• IRS Form 14654, Certification by U.S. Person Residing in the U.S.
• Payment of all taxes owed
• Payment of the miscellaneous offshore penalty

International IRS Streamlined Filing Procedures

For U.S. taxpayers living abroad, similar information must be provided (along with any owed tax amounts), but using a different set of IRS Voluntary Disclosure forms.

IRS Voluntary Disclosure Program (VDP)

For U.S. taxpayers addressing willful IRS disclosure violations, the disclosure process is significantly different. It is more extensive, detailed, and requires comprehensive information about the taxpayer, assets, and accounts. Typically, this program entails submitting multiple years of FBARs, tax returns, and making payments for owed taxes over several years.

The disclosure process begins with completing Part I of IRS Form 14457, Voluntary Disclosure Practice Preclearance Request and Application. The IRS Criminal Investigation unit reviews the application. If preclearance is granted, taxpayers must submit Part II of the IRS Voluntary Disclosure Application within 45 days.

Throughout the process, taxpayers must cooperate and provide additional documents or information as requested. There is also the possibility of the IRS Criminal Division rejecting the application. Given the risks associated with the VDP, it is crucial for taxpayers seeking protection to rely on guidance and representation from an experienced IRS Voluntary Disclosure New York tax lawyer.

Understanding the Penalties Associated with the 2026 Voluntary Disclosure Program (VDP)

U.S. taxpayers, including individuals, estates, and entities, face significant penalties for failing to disclose their foreign financial assets as required by FATCA. These penalties start at $10,000 for each unfiled return and can increase by an additional $10,000 for every 30 days of non-filing after the IRS notifies the taxpayer of the failure to disclose, with a maximum of $60,000 per violation per year. For failing to file an FBAR to disclose offshore bank accounts, penalties start at $10,000 per unfiled form and can reach up to 50% of the highest balance in the undisclosed accounts. Penalties are assessed for each year the taxpayer does not disclose their foreign interests.

Participating in the IRS Streamlined Filing Compliance Procedures allows taxpayers to make a voluntary disclosure to correct filing errors with a significantly reduced penalty of 5% of the total account balances for one year only. In certain cases, taxpayers may even qualify for a penalty waiver.

However, it's important to note that failure to disclose offshore accounts can also lead to criminal penalties. Participating in the IRS’s Streamlined Filing Compliance Procedures does not guarantee immunity from criminal liability. If charged with criminal tax fraud, U.S. taxpayers may face additional fines and potential federal incarceration.

What is a Passive Foreign Investment Company (PFIC) Under the IRS Voluntary Disclosure Program (OVDP), and Must it Be Disclosed?

The term "passive foreign investment company" (PFIC) refers to any entity holding a U.S. taxpayer's offshore accounts or other foreign financial assets. PFICs serve to protect these assets from certain liabilities but do not shield against IRS offshore disclosure violations. Taxpayers must disclose PFICs to the IRS using Form 8621, and failure to do so can result in substantial penalties.

U.S. taxpayers with undisclosed PFICs can correct these violations under the IRS’s Streamlined Filing Compliance Procedures (for non-willful violations) or the OVDP. To determine eligibility for streamlined filing, taxpayers should consult with an experienced offshore tax compliance attorney before voluntarily disclosing information to the IRS.

When Is the 2026 IRS Voluntary Disclosure (OVDP) Not Suitable, and What Are the Alternatives?

The IRS’s Offshore Voluntary Disclosure Program may not be suitable in every case. Considerations for U.S. taxpayers deciding whether to pursue an IRS Voluntary Disclosure include:

• The Streamlined Procedures apply solely to foreign financial assets: The IRS’s Streamlined Filing Compliance Procedures are restricted to U.S. taxpayers who failed to disclose foreign financial assets under FATCA. If other federal tax obligations are overdue, Streamlined Procedures are not an IRS Voluntary Disclosure option.
• Streamlined Procedures are limited to non-willful violations: The IRS Streamlined Filing Procedures are exclusively available to U.S. taxpayers who made non-willful errors. The violation must result from inadvertence, negligence, error, or a good-faith misinterpretation of the law.
• IRS Voluntary Disclosure is available for willful violations: In contrast to the IRS Streamlined Filing Procedures, the IRS Voluntary Disclosure Practice (VDP) is an option for most U.S. taxpayers who willfully violated tax laws. If a taxpayer knew about the requirement to report offshore financial accounts but still did not comply, the taxpayer must consider whether to use the VDP instead of pursuing an IRS streamlined filing.
• Voluntary Disclosure does not guarantee full protection against IRS enforcement: Regardless of whether the FBAR violation was non-willful or willful, an IRS voluntary disclosure does not automatically shield against IRS enforcement actions. IRS agents will scrutinize the voluntary disclosure and past filings, determining whether further enforcement or an IRS criminal investigation is warranted.

Given the complexity of IRS disclosure programs and to protect their interests, taxpayers should engage the services of an experienced New York IRS Disclosure tax attorney.

Is the 2026 IRS Voluntary Disclosure Program Applicable to Businesses?

Yes, businesses with undisclosed offshore accounts or other foreign financial assets may utilize the IRS voluntary disclosure program. The IRS Streamlined Filing Compliance Procedures are applicable to domestic corporations, partnerships, trusts, and foundations. Business entities must meet the same foreign account disclosure obligations as individual U.S. taxpayers. To achieve a valid IRS voluntary disclosure, businesses must satisfy the same requirements as individual taxpayers. Failure to fulfill these obligations or compliance requirements could trigger an IRS audit or criminal investigation into the business’s IRS voluntary disclosure.

IRS Forms Required for Companies Participating in the 2026 IRS Voluntary Disclosure Program

The specific IRS forms required for companies to utilize the IRS’s Streamlined Filing Compliance Procedures or VDP for an IRS voluntary offshore disclosure depend on (i) the nature of the business, and (ii) the particular foreign financial asset(s) subject to disclosure. Under different circumstances, required company forms may include:

• IRS Form 1040X (for sole proprietorships and pass-through entities)
• IRS Form 1120-X (for corporate entities)
• IRS Forms 3520, 3520-A, 5471, 5472, 8938, 926, and/or 8621 (for various types of foreign financial assets)
• IRS Form 14654

To engage in IRS Criminal Investigation’s Voluntary Disclosure Practice or VDP, companies must complete Part I of IRS Form 14457. Upon receiving clearance for VDP participation, companies must then submit Part II of IRS Form 14457 and any requested supplemental documentation.

Explaining IRS Form 906: Closing Agreement in the 2026 IRS Voluntary Disclosure Program (VDP)

An IRS Form 906 Closing Agreement is a binding document between the IRS and a taxpayer. It conclusively resolves a tax issue between the IRS and the taxpayer. The IRS Form 906 is employed for matters beyond the scope of a taxpayer’s general income tax liability—including satisfying taxpayers’ offshore disclosure compliance obligations. The IRS explains:

“A voluntary closing agreement is an IRS Form 906 voluntarily initiated by a taxpayer for the IRS in which the taxpayer has inadvertently failed to meet a requirement in the Internal Revenue Code. The agreement allows a taxpayer to come forward to correct the failures voluntarily or otherwise to work with the IRS to correct them."

The IRS also emphasizes the discretionary aspect of entering into a closing agreement. This means that submitting an IRS voluntary disclosure will not necessarily lead to an executed closing agreement. For your best chances of securing a closing agreement, it is essential to hire an experienced New York tax litigation attorney to handle your IRS voluntary disclosure.

Factors that Could Transform a Voluntary Disclosure to the IRS into a Criminal Case

An IRS voluntary disclosure may lead to criminal prosecution if the IRS finds evidence of willful failure to report offshore accounts or other foreign financial assets.

Recall, the IRS’s Streamlined Filing Compliance Procedures cover non-willful violations. To submit a streamlined filing, the taxpayer must confirm that each violation in question was non-willful. Nevertheless, the IRS assesses facts to decide whether the taxpayer is eligible to make an IRS streamlined filing.

Upon streamlined filing submission, the IRS can use the provided information in any manner. Therefore, if the IRS determines that the taxpayer’s violation was willful, the IRS might exploit the information supplied for starting a criminal investigation. The same rule applies to the IRS Criminal Investigation’s Voluntary Disclosure Practice applications, and if IRS agents find a taxpayer not suitable for pre-clearance, they can exploit the information in the application to claim criminal charges.

Steps to Take if the IRS Contacts You Before You Make a Voluntary Disclosure in 2026:

If the IRS contacts the taxpayer before a voluntary disclosure gets made, the taxpayer should instantly engage an experienced New York tax defense lawyer. At this point, the taxpayer is not eligible to make an IRS voluntary disclosure (under Streamlined Procedures or VDP), and the taxpayer is vulnerable to all potential civil and criminal penalties under FATCA, the Bank Secrecy Act (BSA), and additional federal statutes that could apply.

Taxpayers will need to thoughtfully analyze their options with the guidance of a New York IRS tax attorney. Trust in your lawyer's guidance to decide how to disclose any foreign financial assets.

What Might Lead to an IRS Voluntary Disclosure Becoming a Criminal Matter in 2026?

The primary factor causing an IRS voluntary disclosure to the Streamlined Filing Compliance Procedures is willfulness. These procedures only protect non-willful violations. If the IRS agent scrutinizing your streamlined filing finds the non-willfulness certification invalid, your submission could get rejected. There could also be a federal tax fraud prosecution.

Regarding VDP submissions, you must have reasons to file under that procedure or have some concerns. The IRS Criminal Investigation Division, though, emphasizes that entering into the VDP application does not guarantee protection from criminal charges.

Here are other contributing factors:

1. Civil investigation or criminal investigation,
2. Information from a third party about offshore disclosure violations, and
3. Information from other sources (e.g., a subpoena or search warrant).

In certain situations, taxpayers cannot get the VDP benefits, and the IRS can use application information to prosecute them.

Understanding a "Quiet" 2026 IRS Voluntary Disclosure

A “quiet” IRS voluntary disclosure involves simply amending your past returns without utilizing the Streamlined Filing Compliance Procedures or the VDP. This approach is not recommended for a variety of reasons and has not been supported by the Commissioner of the IRS in many public statements.

While some taxpayers hope to avoid detection by making a quiet disclosure, the chances of success are very low. The IRS is aware of this tactic, and IRS revenue agents carefully scrutinize filings that contain amended information regarding foreign financial accounts.

A quiet disclosure not only increases the risk of detection but also precludes the possibility of obtaining reduced penalties or avoiding criminal prosecution through the Streamlined Filing Compliance Procedures or the VDP. Often, the IRS initiates audits into taxpayers who make quiet disclosures and may even launch criminal investigations in such cases. Therefore, it is strongly advised that any taxpayer considering a quiet disclosure consult with an experienced New York IRS tax attorney before proceeding.

What Is an FBAR, and How Does it Relate to 2026 IRS Voluntary Disclosure?

We briefly mentioned FBARs earlier, but it is important to clarify their role in this context. In many instances, U.S. taxpayers with foreign financial accounts must fulfill two separate filing requirements: (i) filing IRS Form 8938 under FATCA, and (ii) filing an FBAR under the BSA.

Why are there two requirements for essentially the same information? Firstly, IRS Form 8938 and the FBAR are submitted to different agencies—FBARs are filed with FinCEN. Secondly, from the government’s standpoint, FATCA and FBAR serve distinct purposes. Although there is some overlap between the two, not everyone required to file an FBAR will need to submit IRS Form 8938, and vice versa. Consequently, to ensure compliance with FATCA, U.S. taxpayers holding offshore accounts must also meet FBAR filing obligations.

The Relationship Between FBAR and IRS Voluntary Disclosure

In many cases, a U.S. taxpayer making an IRS voluntary disclosure must also file an FBAR (or multiple FBARs) with FinCEN. Taxpayers behind on their FBAR filings must complete all necessary submissions to FinCEN concurrently with their streamlined filings to the IRS.

Is Reporting a Cryptocurrency Account on an FBAR or Offshore Voluntary Disclosure Required?

Currently, cryptocurrency accounts are not subject to disclosure under the Bank Secrecy Act. Consequently, U.S. taxpayers holding only cryptocurrency accounts are not required to file FBARs to report these accounts. However, if a foreign financial account includes cryptocurrency along with other assets, an FBAR filing may still be necessary.

As FATCA applies not only to foreign financial accounts but also to a broader array of foreign financial assets, cryptocurrency investors may need to report their offshore holdings to the IRS under certain circumstances, given the evolving legal landscape.

Taxpayers failing to report accounts with commingled foreign financial assets must assess whether an IRS voluntary disclosure is the best course or if another option may be more suitable given their specific circumstances. Regardless, due to the complexity of these assets and the continually changing legal environment, it is strongly recommended that taxpayers consult an experienced New York IRS tax attorney when evaluating any IRS Voluntary Disclosure.

Identifying "Problematic" Banks in the 2026 IRS Voluntary Disclosure Program

Foreign financial institutions failing to meet their reporting obligations under FATCA may be categorized as problematic by the IRS, DOJ, and other governmental bodies. This designation carries significant implications, potentially increasing penalties for taxpayers who fail to disclose their foreign financial assets. The IRS continually updates its list of problematic banks.

The Next Phase for the 2026 IRS Voluntary Disclosure Program (OVDP)

With the replacement of OVDP by the IRS’s Streamlined Filing Compliance Procedures and IRS Criminal Investigation’s Voluntary Disclosure Practice (VDP), what lies ahead for U.S. taxpayers holding offshore accounts and other foreign financial assets? The overarching message to taxpayers is that the IRS takes the disclosure of foreign financial assets seriously, and the obligations under FATCA and the Bank Secrecy Act are enduring.

If anything, the IRS, FinCEN, and DOJ are expected to intensify efforts to combat violations related to offshore account disclosures. Given the recent surge in cryptocurrency popularity, accounts holding Bitcoin and other virtual currencies are likely to attract heightened scrutiny from 2026 onward. Nevertheless, all offshore accounts and foreign financial assets carry enforcement risks, compelling taxpayers to fulfill their obligations to avoid potentially severe civil or criminal investigations.

For questions or concerns regarding FATCA compliance, FBAR filing requirements, or IRS voluntary disclosures, it is crucial to engage experienced former IRS tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group. Mr. Thorn has handled thousands of IRS Voluntary Disclosure Program cases since OVDP’s inception in 2009, assisting clients in minimizing penalties, avoiding IRS audits, and, in most cases, steering clear of criminal charges.

Mr. Thorn's office is situated at 69 State St., Suite 452, Albany, NY 12207. Kevin Thorn maintains strong connections with key figures in major government entities in New York, as well as in Washington, D.C,. involved in IRS voluntary disclosure programs, including the Internal Revenue Service, U.S. Department of Justice, FinCEN, and U.S. Tax Court. His advocacy has saved his clients billions of dollars in taxes, penalties, interest, and shielded many from incarceration.

Contact Kevin E. Thorn, New York IRS Criminal Tax Attorney, regarding IRS Tax Audits, Voluntary Disclosure Programs, or Offshore Voluntary Disclosures today at (914) 534-6004 or ket@thornlawgroup.com.