IRS Plans Lower Penalties for Crypto Tax Voluntary Disclosures

The US Internal Revenue Service is planning to overhaul its voluntary disclosure program, lowering penalties and accelerating resolutions for taxpayers who report past tax violations, including cryptocurrency-related offenses. According to a Friday Forbes report cited by CoinTelegraph, the IRS aims to introduce the revised program before December and resolve cases within 120 days of taxpayers completing the required submissions.

IRS Criminal Investigation Chief Jarod Koopman said at the UCLA Extension Tax Controversy Conference that digital assets would not receive a separate disclosure process. Crypto tax violations would be handled through the same procedures used for other forms of noncompliance. The IRS is also considering installment plans and offers in compromise, while penalties would be substantially lower than current levels, although specific figures have not been announced. The existing voluntary disclosure process is designed primarily for willful violations that could lead to criminal prosecution and can take a year or longer to resolve.

Lawmakers are pursuing a separate initiative for crypto taxpayers who made unintentional reporting errors. Section 502 of the proposed Digital Asset Tax Certainty Act would establish a process for correcting past violations with defined penalties. The legislation cleared the House Ways and Means Committee in September, creating a distinct framework from the IRS’s planned changes for voluntary disclosures.