A proposed US bill would let crypto investors correct past tax reporting mistakes through a dedicated disclosure program, with reduced penalties for eligible taxpayers.
Crypto investors who failed to report trades in previous years may soon breathe a sigh of relief thanks to legislation currently advancing in the US Congress.
Section 502 of the Digital Asset Tax Certainty Act, H.R. 10357, would require the Treasury secretary to establish a Digital Asset Voluntary Disclosure Program within 12 months of the bill becoming law.
That would allow eligible taxpayers to correct any past digital asset tax violation by filing amended returns and paying the tax owed, along with interest and a program penalty.
The House Ways and Means Committee approved the bill by a 38-5 vote on Sept. 16, but it has not become law yet; it still has to pass the House and Senate and be signed by the president.
“It’s a big change that would help a lot of ordinary taxpayers, and it has gotten very little attention,” Andrew Gordon, executive director of Digital Asset Tax Action, tells Magazine.
A gap in the system
Crypto investors in the US are already grappling with the first filing season under the new 1099-DA broker reporting rules, which give the IRS greater visibility into crypto transactions.
Gordon says those rules should make reporting easier going forward, but they fail to address the years before coming into effect.
The House Ways and Means Committee approved the bill by a 38-5 vote
“A large share of investors didn’t report correctly over the years,” he says, and existing procedures don’t offer taxpayers who made “honest mistakes” a predictable way to resolve their liabilities.
“Today, a crypto investor who learns they didn’t properly report their crypto or has not reported at all has no good way to fix it,” he says; investors can discover years later that they misunderstood the tax treatment of crypto-to-crypto trades or reporting activity across multiple platforms.
What taxpayers could get
The IRS’s existing Voluntary Disclosure Practice is aimed at taxpayers who willfully violated tax rules and face potential criminal exposure.
For taxpayers with errant reporting skills, they can currently correct their mistakes by filing amended returns, but the penalty treatment is not as predictable as provision 502’s proposed crypto-specific program.
Sharon Yip, a certified public accountant (CPA) and founder of Crypto Tax Advisors, says reporting errors among ordinary crypto investors are common.
In her firm’s experience, some clients did not report crypto because they believed no tax was due until they cashed out, while others relied on incomplete exchange records or incorrectly classified transactions.
“There is no standardized process that gives non-willful crypto investors predictable penalty treatment or a clear resolution,” Yip tells Magazine.
She says a crypto-specific program could “fill this gap” by providing a “defined correction period, reduced and predictable penalties and greater certainty for taxpayers who come forward voluntarily.”
What the bill would offer
Under Section 502, taxpayers would generally have to file amended returns within 24 months of the program being established, and the bill sets out two penalty tracks.
There are lower rates for taxpayers who certify under penalty of perjury that their violations were neither fraudulent nor willful. They would face a 0% penalty on the first $25,000 of tax deficiency per year and 5% on amounts above that, if they file within the first 12 months of the program.
For those who don’t certify, rates of 25% on the first $25,000 and 40% above it apply, with the rates increasing if taxpayers miss the initial window.
49% of crypto users understood selling crypto can be a taxable event
There is also relief from specified civil penalties, and taxpayers who don’t certify are protected from criminal referrals based on information properly disclosed for the tax offenses covered by the provision.
Yip says taxpayers should check their transaction histories across exchanges and wallets to identify which years need correcting before assessing whether their mistakes were genuinely non-willful.
Because falsely certifying carries a penalty of perjury, she advises seeking professional guidance where taxpayers are unsure.
Section 502 could come as a welcome relief for many US crypto users; a 2026 report by CoinTracker and Coinbase found that only 49% correctly understood that selling crypto can be a taxable event.
Magazine:Crypto lending rises again… but have they solved the risks?
More on the subject
BingX, YouHodler added to ESMA MiCA register in latest update
Lagarde says euro-area economy is resilient, digital euro under development
