2026 Update IRS Amnesty Program

The IRS has Enacted Key Changes to its Offshore Tax Amnesty Program

While the Internal Revenue Service (IRS) does not offer a true amnesty program, it offers multiple options for taxpayers who have failed to meet their federal filing and payment obligations. These options are available in different circumstances and offer distinct benefits. As a result, it is critical for taxpayers to make informed decisions about which of these options to pursue.

Voluntary Disclosure Practice (VDP)

The IRS’s Voluntary Disclosure Practice (VDP) is commonly referred to as the IRS’s amnesty program. Formerly known as the Offshore Voluntary Disclosure Program (OVDP), the VDP has undergone significant changes in recent years, and the IRS has proposed additional changes for 2026.

Eligible taxpayers can use the VDP to address willful tax law violations. This includes, but is not limited to, willful violations such as:

• Underreporting and underpaying federal tax (tax fraud and tax evasion)
• Using abusive tax shelters
• Failing to disclose offshore accounts and other foreign financial assets

The VDP is administered by the IRS Criminal Investigation (IRS CI), and submitting a successful voluntary disclosure can protect taxpayers against facing criminal prosecution. However, the voluntary disclosure process is complex (and high-risk), so working closely with experienced tax counsel is strongly recommended.

To qualify as a voluntary disclosure under the VDP, a taxpayer’s disclosure must come before the IRS (or any other federal agency) opens a civil examination or criminal investigation. Taxpayers who have legal representation can rely on their counsel to assess their eligibility and help them make informed decisions about how best to proceed.

Streamlined Filing Compliance Procedures

The IRS’s streamlined filing compliance procedures are available to taxpayers who need to address non-willful violations of their offshore disclosure obligations. Taxpayers that hold offshore bank accounts and other foreign financial assets may have disclosure obligations under the Bank Secrecy Act (BSA), Foreign Account Tax Compliance Act (FATCA), or both.

Examples of non-willful violations that taxpayers can correct through the IRS’s streamlined filing compliance procedures include:

• Failure to disclose offshore bank accounts exceeding the threshold values established under the BSA and FATCA
• Failure to disclose other foreign financial assets exceeding the threshold values established under the BSA and FATCA
• Incorrectly disclosing offshore bank accounts or other foreign financial assets to the IRS or the Treasury Department’s Financial Crimes Enforcement Network (FinCEN)

Taxpayers seeking to utilize the IRS’s streamlined filing compliance procedures must sign a certification of non-willfulness, and they must generally be prepared to pay what they owe. Successfully submitting a streamlined filing provides an opportunity to come into compliance without incurring additional liability from an IRS audit or IRS CI investigation.

Penalty Relief

Taxpayers facing penalties for noncompliance with their federal filing or payment obligations may also be eligible for penalty relief in some cases. The IRS offers penalty abatement for eligible taxpayers facing penalties for the first time and penalty relief for reasonable cause as well. Taxpayers can also seek penalty relief based on statutory exceptions in some cases. If you are interested in seeking penalty relief (or learning about any other options you may have for mitigating your liability to the IRS), we encourage you to contact us for more information.

IRS Offshore Tax Amnesty Frequently Asked Questions:

1. Why did the IRS establish an Offshore Tax Amnesty Program?

In 2009, the United States Internal Revenue Service (IRS) created a tax amnesty program to help combat offshore tax evasion known as the IRS Offshore Voluntary Disclosure Program (OVDP).  This program was designed to entice taxpayers who had failed to disclose foreign or offshore accounts to voluntarily come forward to report their undisclosed accounts to the IRS.  Taxpayers who used the OVDP to alert the IRS of their past failures to disclose foreign accounts and file the required Report of Foreign Bank and Financial Accounts (FBAR) would be eligible for reduced financial penalties and might be able to avoid potential criminal prosecution.  

2. Have the past IRS voluntary disclosure programs been successful?

While the 2009 OVDP ended in October 2009, the IRS launched a new Offshore Voluntary Disclosure Initiative in 2011, and in 2012 the IRS established its third generation tax amnesty program – the 2012 OVDP. According to the IRS, more than 45,000 offshore account disclosures have occurred through these three tax amnesty programs with the government collecting approximately $6.5 billion in back taxes, interest and penalties. The legal team at Thorn Law Group has helped hundreds of clients throughout the nation and around the world to successfully resolve offshore account problems through these IRS amnesty programs.

3. Why did the IRS modify the 2012 OVDP?

In June 2014, the IRS announced major modifications to the 2012 OVDP. These changes are designed to expand opportunities for both taxpayers residing in the United States and taxpayers living abroad to participate in the OVDP. The IRS expects thousands of additional taxpayers will now be able to use the OVDP to report their undisclosed offshore accounts and come into compliance with their tax obligations.  

4. What do the 2014 changes to the 2012 OVDP include?

Modifications to the 2012 OVDP include expanding the eligibility criteria for the streamlined compliance procedures and revising several other key OVDP components. Under the 2012 OVDP, only non-resident, non-filers were able to use the streamlined process to come into tax compliance. With the 2014 changes, more taxpayers who are living abroad, as well as some taxpayers who are living in the United States, will now be permitted to use the streamlined program to report previously undisclosed foreign accounts and assets. It is important to note the 2014 streamlined program still limits participation to non-willful violators. This means taxpayers who have acted willfully in failing to report their offshore accounts to the IRS will still be unable to take advantage of the streamlined compliance process.

According to the 2014 streamlined program, taxpayers are now required to certify that the failure to comply with the offshore reporting requirements was non-willful. Additionally, the IRS has eliminated the previous requirement that a taxpayer must have $1,500 or less in unpaid tax liabilities per year. The submission of a risk questionnaire is also no longer required. The revised streamlined program also limits the penalties for non-willful violators living in the U.S. to five percent of the unreported offshore assets and waives all penalties for non-willful violators residing outside of the U.S.

The 2014 changes to the OVDP also impact willful violators who are not eligible to participate in the IRS streamlined program.  New requirements have been put in place for willful violators seeking to make a voluntary disclosure under the OVDP. These taxpayers must now submit additional information to the IRS when applying to the OVDP program, including all account statements. Additionally, willful violators must pay their offshore tax penalty at the time of their application. In certain situations, willful violators may be subject to increased penalties as compared to past years.

5. How can a skilled tax amnesty attorney help?

While the IRS’ 2014 changes to the OVDP may be aimed at increasing opportunities for taxpayers with offshore accounts and assets to come into legal compliance, the program is still complicated and challenging to navigate without the guidance of a knowledgeable tax attorney. Moreover, it is important to remember the stakes are high. If it becomes public that the IRS or the DOJ has initiated an investigation of the financial institution where your undisclosed foreign accounts are held, your offshore penalty will increase from 27.5 percent to 50 percent.

If you have undisclosed foreign accounts, a skilled tax amnesty attorney Thorn Law Group can explain the options available to bring your accounts back into compliance with U.S. tax laws and regulations. The experienced legal team at our firm represents taxpayers across the nation and abroad who are seeking to resolve serious offshore account problems. Whether your failure to file your FBAR and report your foreign accounts was willful or non-willful in nature, our firm can help. Contact Kevin E. Thorn, Managing Partner of Thorn Law Group, today at one of our three offices:

Washington D.C. Office:
(202) 349-4033

New Jersey Office: 
(201) 842-7696

Boston Office:
(617) 692-2989