IRS Voluntary Disclosure Practice

The IRS Criminal Investigation Voluntary Disclosure Practice provides a process for taxpayers with potentially willful tax noncompliance to come forward, disclose the conduct, and seek to resolve their tax and reporting obligations before the government discovers the violation.

Voluntary disclosure can involve domestic tax violations, offshore accounts, unreported foreign income, missing FBARs, false returns, undisclosed entities, and other willful tax or tax-related noncompliance.

Colorado Legal represents taxpayers evaluating voluntary disclosure, offshore compliance, FBAR exposure, and related criminal-tax concerns. Philip M. Falco is both a Colorado attorney and Certified Public Accountant.

What Is the IRS Voluntary Disclosure Practice?

The IRS Criminal Investigation division administers the Voluntary Disclosure Practice, commonly abbreviated VDP.

The practice is intended for taxpayers whose noncompliance was intentional or deliberate rather than merely accidental or the result of misunderstanding.

The IRS distinguishes VDP from compliance options intended for non-willful taxpayers, including the Streamlined Filing Compliance Procedures.

Who Should Consider IRS Voluntary Disclosure?

A taxpayer should consider obtaining advice about VDP when the facts raise substantial concern that prior tax or reporting violations may have been willful.

Examples can include:

• intentional failure to report income;
• deliberately unreported foreign financial accounts;
• false statements or intentionally false tax returns;
• willful failure to file FBARs or international information returns;
• intentional use of entities or accounts to conceal taxable income;
• deliberately overstated deductions;
• willful failure to pay tax;
• multiple years of deliberate noncompliance; or
• other circumstances creating potential criminal-tax exposure.

The existence of a foreign account does not by itself mean that VDP is appropriate. The key issue is the nature of the taxpayer’s conduct.

VDP vs. Streamlined Filing Compliance

Issue	Streamlined Procedures	IRS Voluntary Disclosure Practice
Conduct	Requires non-willful conduct	Designed for potentially willful noncompliance
Certification / acknowledgment	Taxpayer certifies non-willfulness	VDP process requires acknowledgment of willful noncompliance
Criminal exposure	Not designed as the procedure for willful criminal-tax conduct	Designed for taxpayers seeking to disclose potentially criminal tax violations
Process	Tax returns, FBARs, certification, and applicable Streamlined requirements	CI preclearance and application followed by civil examination if accepted

See also our discussion of willful vs. non-willful FBAR violations.

How the Current VDP Process Begins

The current IRS process begins with Form 14457, Voluntary Disclosure Practice Preclearance Request and Application.

The general process includes:

1. preparing and submitting Part I of Form 14457 to request preclearance;
2. waiting for IRS Criminal Investigation to determine whether the taxpayer is precleared;
3. if precleared, submitting Part II of Form 14457 within the applicable deadline;
4. IRS Criminal Investigation reviewing the Part II submission for preliminary acceptance;
5. if preliminarily accepted, transfer of the matter to the civil side of the IRS; and
6. cooperating with the assigned civil examiner to resolve the tax, penalties, interest, returns, and information-reporting obligations.

Preclearance does not itself guarantee preliminary acceptance into the Voluntary Disclosure Practice.

Form 14457

Form 14457 is central to the current voluntary disclosure process.

The form requires detailed information concerning the taxpayer, entities involved, noncompliance, professional advisers, accounts, assets, income, and the conduct being disclosed.

A taxpayer making a voluntary disclosure should expect the IRS to evaluate whether the disclosure is truthful, timely, and complete.

What Happens After Preclearance?

Under the current IRS procedure, a taxpayer who receives preclearance generally must electronically submit Part II of Form 14457 within 45 days of the preclearance letter unless an extension is obtained under the IRS procedure.

IRS Criminal Investigation then determines whether the taxpayer receives preliminary acceptance.

If accepted, the case is forwarded for civil examination. The taxpayer is expected to cooperate, provide requested information and documents, and resolve the tax liabilities, interest, and applicable penalties.

Acknowledgment of Willful Noncompliance

The current IRS VDP procedure requires a participating taxpayer to acknowledge the willful failure to comply with tax or tax-related obligations.

This is one of the fundamental reasons a taxpayer should not treat VDP and Streamlined as interchangeable filing programs.

A taxpayer uncertain about whether the facts amount to willfulness should evaluate that issue before entering either process.

Offshore Accounts and VDP

Foreign financial accounts remain an important reason taxpayers consider voluntary disclosure.

An offshore case can involve:

• unreported foreign bank or brokerage accounts;
• unreported foreign-source income;
• FBAR violations;
• Form 8938 omissions;
• foreign corporations or partnerships;
• foreign trusts;
• PFIC investments;
• nominee entities or account holders;
• foreign cryptocurrency activity; or
• multiple overlapping international information returns.

For basic foreign account filing requirements, see our FBAR Filing and FinCEN Form 114 page.

Is the Old Offshore Voluntary Disclosure Program Still Available?

No. The former Offshore Voluntary Disclosure Program, commonly known as OVDP, closed in 2018.

The current IRS Criminal Investigation Voluntary Disclosure Practice is a different compliance framework. Older internet articles describing OVDI or prior OVDP penalty structures should not be assumed to describe the current procedure.

Pending IRS Proposal to Revise the Voluntary Disclosure Practice

In December 2025, the IRS announced proposed revisions to the Voluntary Disclosure Practice and requested public comment.

The IRS currently describes those revisions as a proposal rather than as the operative procedure. The IRS states that the proposed changes do not create rights or expectations before the revisions are finalized and placed into effect.

Because VDP procedures can change, a taxpayer considering disclosure should confirm the rules actually in effect at the time of the submission rather than relying on an older description of the program or on provisions contained only in a pending proposal.

When Is a Voluntary Disclosure Timely?

The effectiveness of a voluntary disclosure depends heavily on timing.

A taxpayer generally cannot wait until the government has already discovered the noncompliance and then assume that a subsequent disclosure will receive voluntary disclosure treatment.

Relevant government activity can include IRS examinations, criminal investigations, third-party reporting, summons activity, information obtained from foreign institutions, whistleblower information, or other enforcement developments.

The specific facts should be evaluated promptly where detection may be imminent.

Does Voluntary Disclosure Guarantee No Prosecution?

No. The Voluntary Disclosure Practice does not create an automatic statutory immunity from prosecution.

A truthful, timely, and complete voluntary disclosure is an important factor considered within the IRS criminal-tax enforcement framework, but participation should not be described as an absolute guarantee that criminal prosecution is impossible.

What If My Conduct Was Non-Willful?

The IRS expressly distinguishes non-willful mistakes from the conduct addressed through VDP.

Depending on the facts, a non-willful taxpayer may instead need to evaluate:

• Streamlined Filing Compliance Procedures;
• amended return procedures;
• delinquent return procedures;
• delinquent international information-return procedures;
• delinquent FBAR procedures; or
• other current IRS compliance options.

Why Legal Analysis Matters Before Filing

The choice between Streamlined, voluntary disclosure, delinquent filings, amended returns, or another compliance method can turn on the taxpayer’s prior conduct.

Making new filings can also create documents and representations that become part of the taxpayer’s compliance history.

Where potential willfulness or criminal exposure exists, taxpayers should consider obtaining legal advice before submitting amended returns, delinquent FBARs, certifications, or statements to the IRS.

Attorney and CPA Representation

Voluntary disclosure matters frequently require detailed tax reconstruction as well as legal analysis.

Philip M. Falco is both an attorney and CPA. Depending on the engagement, Colorado Legal can assist with:

• review of prior federal tax returns;
• foreign account and FBAR analysis;
• reconstruction of unreported income;
• review of international information returns;
• willfulness analysis;
• Form 14457 preparation and legal analysis;
• coordination of amended and delinquent returns;
• IRS examination representation;
• penalty analysis; and
• related criminal tax representation.

Frequently Asked Questions

Is OVDP still available?

No. The former Offshore Voluntary Disclosure Program closed in 2018. The IRS currently maintains the Criminal Investigation Voluntary Disclosure Practice.

Is VDP only for offshore accounts?

No. The Voluntary Disclosure Practice can apply to qualifying willful tax and tax-related noncompliance involving domestic or offshore matters.

Do I use VDP if my mistake was non-willful?

Generally, the IRS directs taxpayers whose failures were not willful to consider other compliance options. Streamlined procedures may be relevant in qualifying offshore cases involving non-willful conduct.

Does preclearance mean I have been accepted into VDP?

No. The IRS states that preclearance determines eligibility to proceed with the application but does not guarantee preliminary acceptance into the practice.

Are the proposed 2025 VDP changes already in effect?

The IRS currently describes those changes as proposed. Taxpayers should use the procedures actually in effect at the time of the disclosure.

Official IRS Resources

• IRS Criminal Investigation — Voluntary Disclosure Practice
• IRS — Options for Taxpayers With Undisclosed Foreign Financial Assets
• IRS — Streamlined Filing Compliance Procedures

This page provides general information. Voluntary disclosure eligibility, procedures, penalties, and criminal-tax consequences depend upon the taxpayer’s particular facts and the IRS procedures in effect at the time of submission.