The IRS has several programs in place, including the Offshore Voluntary Disclosure Program. Even those who intentionally hid their money overseas are allowed to confess to the IRS and correct their taxes for eight years.
Robert McKenzie Forbes Blog on Reducing IRS Penalties Custom Search
Procedural Requirements for Imposition of Penalties and Additions to Tax
The Internal Revenue Service Restructuring Act required that each notice imposing a penalty include the name of the penalty, the Code section imposing the penalty, and a computation of the penalty. The Act also requires the specific approval of IRS management to assess all non computer generated penalties unless excepted. This provision does not apply to failure to file penalties, failure to pay penalties, or to penalties for failure to pay estimated tax.
On March 7, 2012 the Internal Revenue Service announced a major expansion of its “Fresh Start” initiative to help struggling taxpayers by taking steps to provide new penalty relief to the unemployed and making Installment Agreements available to more people.