IRS Clears Crypto Tax Disclosures in 120 Days, Cuts Penalties — What's Next?

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IRS crypto tax disclosure lower penalties 120 days

The IRS wants to clear voluntary crypto tax disclosures in just 120 days — and cut the penalties for taxpayers who come forward — with the new system planned before December. For US crypto traders who missed reporting past gains, this could be the fastest and cheapest way to settle up with the taxman.

Key points:

  • The IRS plans to overhaul its voluntary disclosure program before December, targeting 120-day case resolutions — far faster than the year-long process today.
  • Penalties would be "substantially lower" than current ones, with installment plans or compromise settlements possible.
  • Crypto would use the same disclosure process as other tax violations — no separate digital-asset track.

IRS Criminal Investigation Chief Jarod Koopman told attendees at the UCLA Extension Tax Controversy Conference that the agency aims to introduce the revised program before December, with cases resolved within 120 days of taxpayers completing the required submission process. Forbes first reported the planned overhaul on Friday.

The overhaul would reportedly not establish a separate disclosure process for digital assets. The IRS would handle crypto through the same voluntary disclosure procedures used for other forms of tax noncompliance. The existing program is intended for taxpayers whose willful failure to comply could expose them to criminal prosecution, rather than those who made unintentional reporting errors.

Read also: Sweden's Central Bank Revives e-Krona as Cash Use Falls to 5% — Why?

What happens next?

Meanwhile, lawmakers are considering a separate route for crypto taxpayers. Section 502 of the proposed Digital Asset Tax Certainty Act would establish a voluntary disclosure process aimed at crypto taxpayers, including those who made unintentional reporting errors, with defined penalties. The bill cleared the House Ways and Means Committee in September.

What it means for traders: with penalties set to be substantially lower and 120-day resolutions, crypto holders who haven't declared past gains face a friendlier window to fix things before the new system lands.

Read also: South Korea Plans Forex Law Change to Legalize Stablecoin Payments — Why?

— Crypto News Daily News Desk

This post is news only, not financial advice. Always do your own research before buying or selling crypto.

Sources: Cointelegraph, Forbes

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