Recent Regulatory Compliance Changes to Prioritize
Voluntary Disclosure Practice (VDP) Proposal
- The IRS opened a 90-day public comment period ending March 22, 2026, for proposed revisions to its Criminal Voluntary Disclosure Practice (VDP). (taxpayeradvocate.irs.gov)
- The goal: reduce penalties, modernize procedures, and better incentivize non-compliant taxpayers to come into compliance voluntarily. Proposed changes include clarity around FBAR (Foreign Bank Account Reports), appeals rights, and relaxed eligibility. (taxpayeradvocate.irs.gov)
Interim Guidance & Proposed Regulations on Depreciation (§ 168(k))
- Under the One, Big, Beautiful Bill, the IRS/Treasury issued Notice 2026-11 providing interim guidance for the permanent 100% additional first-year depreciation deduction. (irs.gov)
- Proposed regulations will follow to formalize rules: eligible property, elections, and timing. Taxpayers can rely on the interim guidance for property placed in service before final regulations are published, so long as they comply completely. (irs.gov)
Safe Harbor Explanation Guidance for Retirement Plan Administrators
- Notice 2026-13, issued mid-January 2026, updates safe harbor wording administrators use for explaining eligible rollover distributions under section 402(f), required beginning date changes, Roth vs non-Roth rules, and 10% early withdrawal penalties. (irs.gov)
- Plan documents and participant disclosures must be revised to reflect these new options/language. Failing to update could lead to noncompliance or penalties.
Action Steps for Tax Professionals & Businesses
- Audit existing VDP policies: Identify clients or businesses close to noncompliance. Review whether they could benefit from new reduced penalties or eligibility changes. Submit comments on proposed VDP revisions if your firm’s clients will be affected.
- Review upcoming capital purchases: Plan properly for placing assets in service after January 19, 2025 to maximize first-year depreciation benefits. Companies with projects underway should hold off final purchases if needed.
- Update retirement plan notices & documents: Employers and plan administrators need to revise participant handbooks, plan brochures, rollover notices to reflect enhanced safe harbor explanations. Ensure Roth accounts, surviving spouses’ RMD age changes, etc., are clearly communicated.
- Ensure Tone & Timing of Disclosures: For tips, overtime, car loan interest deductions under OBBB, document eligibility, maintain SSN/ITIN status as needed, including timely filing.
Compliance Example Scenarios
| Scenario | Key Rule to Apply | Outcome Risk If Ignored |
|---|---|---|
| A small business embedding payments in sound recording production | Use interim guidance under Notice 2026-11 for § 168(k) to ensure 100% first-year depreciation | Without compliance, may miss full deduction or risk audit adjustments |
| Retirement plan administrator still using pre-2020 rollover explanation templates | Replace with safe harbor language in Notice 2026-13 | Notice forms may be noncompliant; participant rights not properly disclosed |
| Taxpayer with past unreported foreign bank accounts | Watch proposed VDP changes; maybe eligible for more forgiving terms | Without action, higher penalties or criminal exposure |
Staying ahead of these compliance shifts—making sure your documents, disclosures, elections, and filings reflect current rules—is essential to avoid pitfalls and benefit from new opportunities.