The IRS is preparing an overhaul of its Voluntary Disclosure Program that targets faster case resolution and lower penalties. Crypto holders with unreported gains would use the same process as other taxpayers.
The IRS plans to make it easier for taxpayers, including crypto holders, to admit past tax mistakes. IRS Criminal Investigation Chief Jarod Koopman announced the revamped program at the UCLA Extension Tax Controversy Conference. The overhaul is expected before December.
A 120-day target and lower penalties
Koopman outlined a target of resolving cases within 120 days of a completed submission. The current timeline, by contrast, can stretch well beyond a year.
The revised program will feature lower penalties across the board and add flexible payment structures, including installment plans and offers in compromise. Crypto transactions will fall under the general framework rather than a separate track, so the same shorter timelines and reduced penalties apply to unreported digital asset income.
Reporting rules and Congress add pressure
Meanwhile, the IRS rolled out Form 1099-DA reporting requirements for 2025, which require custodial platforms to report digital asset sales directly to the agency.
Congress is also moving. Section 502 of the Digital Asset Tax Certainty Act passed the House Ways and Means Committee and proposes a distinct disclosure option for digital asset violations. Under that proposal, eligible filers could face penalties as low as 0% on the first $25,000 of tax deficiency, provided certain conditions are met.
What it means for holders
For individual holders, the most practical implication is timeline. Anyone with prior unreported gains from trading, staking, mining, or other digital asset activity has a cleaner path forward than before, according to Crypto Briefing. Readers comparing rules abroad can see how to report crypto taxes across different countries.
Source: Crypto Briefing
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