IRS Seeks Public Comment on Voluntary Disclosure Practice Changes: Your Voice Matters
The IRS just announced proposed updates to its Voluntary Disclosure Practice (VDP) and wants to hear from you. The agency has opened a 90-day public comment period (ending March 22, 2026) for proposed changes that could make it more straightforward for Americans living abroad to catch up on unfiled tax returns.
Your opportunity: The IRS is actively seeking feedback on these proposed changes, and comments from American expats could help shape fairer policies for taxpayers living overseas. Whether or not you’re currently facing late filing issues, your perspective on these proposed penalties matters.
Here’s what you need to know about the proposed changes and how to make your voice heard.
What Is the Voluntary Disclosure Practice?
The Voluntary Disclosure Practice is the IRS program for taxpayers who need to come clean about unfiled or inaccurate returns before the IRS discovers the issue. For expats, this often applies when you’ve missed filing requirements for foreign income, FBAR (Report of Foreign Bank and Financial Accounts), or international information returns like Form 5471 or Form 8938.
For a comprehensive overview of the VDP program, including detailed requirements and when it’s necessary, see our complete guide to the Voluntary Disclosure Program.
What’s Changing?
The proposed updates aim to make the VDP penalty structure “clear, predictable, and consistent.” Here’s what that means in practice:
For Delinquent Returns:
- Failure-to-file penalties apply for each year in the disclosure period
- Failure-to-pay penalties do NOT apply
- The disclosure period covers the most recent six years
For Amended Returns:
- A 20% accuracy-related penalty applies for each year in the disclosure period
For FBAR Violations:
- Penalties apply per year and adjust annually for inflation
- More predictable than the previous case-by-case approach
For International Information Returns (Forms 5471, 8938, etc.):
- Penalties up to $10,000 per return, per year
The Timeline and Process
Under the proposed framework, if you’re conditionally approved to participate, you’ll have three months to:
- File all amended or delinquent income tax returns
- File international information returns and FBARs as applicable
- Pay all applicable taxes, penalties, and interest in full
- Execute required agreements to finalize participation
Taxpayers who fully comply won’t be recommended for criminal prosecution, which is crucial peace of mind if you’ve been avoiding the issue out of fear.
What This Means for You
If you’ve been putting off filing because you’re overwhelmed or scared of the consequences, these proposed changes signal that the IRS wants to make it easier for you to come forward. A clearer penalty structure means:
- More predictability: You’ll know what to expect before you start the process
- Less discretionary enforcement: Penalties follow set rules rather than varying case by case
- Incentive to act: The IRS is reinforcing that voluntary disclosure is better than waiting to be discovered
Please note: These proposed changes are currently open for public comment through March 22, 2026. If finalized, they’re expected to take effect six months after publication of the final terms.
How to Submit Your Public Comment
The IRS invites feedback from taxpayers, tax professionals, and advocacy organizations during this 90-day comment period. Your input could influence the final rules.
To submit a comment:
Email: Send your comments to vdp@ci.irs.gov with the subject line “PROPOSED VDP PUBLIC COMMENT”
What to include in your comment:
- Your perspective as an American living abroad
- Specific concerns about how the proposed changes might affect expats
- Suggestions for making the VDP more accessible or fair
- Real-world examples of how current penalties have impacted you or others
Why your comment matters:
The IRS explicitly designed this comment period to gather diverse perspectives. Comments from Americans abroad can highlight unique challenges expats face, such as:
- How expats often don’t know about US filing requirements until years later
- The difference between willful evasion and genuine ignorance of complex filing rules
- How the VDP penalties compare to the more favorable Streamlined Filing procedures for non-willful cases
- Suggestions for clearer guidance on when VDP is truly necessary versus Streamlined Filing
The comment period closes March 22, 2026. Comments submitted after this date may not be considered.
For more details about the proposed changes, visit the IRS Voluntary Disclosure Practice page.
What This Means for Expats Who Need to Catch Up Now
While these proposed VDP changes won’t take effect for months (if finalized), if you’re currently behind on filing, you don’t need to wait. The good news is that most expats have better options available right now.
The Better Option for Most Expats: Streamlined Filing
For the majority of expats who have fallen behind on filing, the Streamlined Filing Compliance Procedures remain the most advantageous pathway to compliance. Unlike the Voluntary Disclosure Practice, Streamlined Filing offers penalty-free catch-up for expats whose failure to file was non-willful.
Here’s why Streamlined Filing is often the better choice:
- No penalties for qualifying expats living abroad
- File only the most recent three years of tax returns and six years of FBARs
- Available if your failure to file was due to negligence, oversight, or misunderstanding (non-willful conduct)
- Must have lived outside the US for at least 330 days during one of the last three tax years
The Voluntary Disclosure Practice is typically reserved for situations where:
- Your failure to file was willful (intentional)
- You don’t qualify for Streamlined Filing
- You need protection from criminal prosecution
Behind on filing? Learn how Greenback helps late tax filers get back on track without penalties. Most expats who simply didn’t know about their filing obligations or made honest mistakes qualify for Streamlined Filing instead.
You’re Not Alone, and It’s Not Too Late
Whether you’re one year behind or five, we can help you determine the best path forward, whether that’s the Voluntary Disclosure Practice, Streamlined Filing Procedures, Delinquent FBAR Submission Procedures, or another route depending on your specific situation.
Specific Help for Your Situation:
- Late filers who are years behind: We specialize in getting you compliant penalty-free
- Never filed taxes as an expat? Don’t panic. We’ve helped thousands in your exact situation
- Only 1-2 years behind? Our late tax return preparation service can get you current quickly
Most of our clients who were behind on filing discovered they owed little to nothing once we applied the Foreign Earned Income Exclusion (up to $130,000 for 2025) and Foreign Tax Credit. The penalties they feared never materialized because they came forward voluntarily.
No matter how late, messy, or complex your return may be, we can help. You’ll have peace of mind, knowing that your taxes were done right.
Take Action: Two Ways to Get Involved
1. Have Your Voice Heard
If you have experience with US expat tax compliance (or challenges with it), consider submitting a comment to the IRS by March 22, 2026. Your perspective could help shape fairer policies for Americans abroad.
Submit comments to: vdp@ci.irs.gov with subject line “PROPOSED VDP PUBLIC COMMENT”
2. Get Back on Track Now
If you’re behind on filing and need help determining the best path forward, don’t wait for these changes to be finalized.
Ready to get back on track? Get started with Greenback today, or contact our Customer Champions if you have questions about your specific situation.
Find the Right Path to Get Compliant.
Related Resources for Late Filers
- Streamlined Filing for U.S. Expats: Your Penalty-Free Path to Tax Compliance – The better option for most expats
- Never Filed Taxes? Here’s How to Catch Up Without Penalties – Complete roadmap for first-time filers
- What Happens When You File Late Taxes as a US Expat – Penalties, extensions, and solutions
- Delinquent FBAR Filing: How to Catch Up Without Penalties – Specific guidance for FBAR catch-up
- IRS Voluntary Disclosure Program: Complete Guide – When willful non-compliance requires serious action
- Tax Fraud vs. Tax Evasion (Explained) – Understanding the difference
This article is for informational purposes only and does not constitute tax, legal, or accounting advice. The proposed changes to the Voluntary Disclosure Practice are subject to modification before finalization. For advice specific to your situation, consult with a qualified tax professional.
