Digital Assets Voluntary Disclosure

Summary#

This bill would create a Digital Assets Voluntary Disclosure Program. The Secretary of the Treasury must set up the program within 12 months. The program lets eligible taxpayers correct past failures to follow Internal Revenue Code rules that relate to ownership or transactions in digital assets (defined as digital representations of value recorded on a cryptographically secured distributed ledger or similar technology).

To use the program, an eligible taxpayer generally must apply, file amended returns for affected years (within 24 months after the program is established), and pay the total tax deficiency (including interest) plus a digital assets violation penalty or enter into an IRS installment agreement. The Secretary may charge a reasonable application fee.

There are two classes of participants: uncertified and certified eligible taxpayers. A certified eligible taxpayer must sign a sworn statement that no violations were fraudulent or willful; uncertified taxpayers do not make that certification. The bill sets different penalty rates and lookback periods for certified versus uncertified taxpayers.

If the Secretary is satisfied with a participant's compliance, the program waives certain additional civil penalties (for uncertified taxpayers, sections 6662 and 6663 penalties; for certified taxpayers, section 6662 penalties). For uncertified taxpayers, the Secretary also would not use properly disclosed information to refer the taxpayer for criminal investigation or prosecute under certain criminal tax sections, subject to the bill's limits. The Secretary may waive part or all of the digital assets violation penalty for reasons the Secretary considers appropriate.

The bill defines the applicable period and applicable taxable years for eligible taxpayers, describes how to calculate the digital assets violation penalty (different percentages apply depending on whether the taxpayer is certified and when amended returns are filed), and requires that assessments and collections be handled under the same rules as taxes. The Secretary must issue regulations or guidance needed to run the program and to assure taxpayers that disclosed information will be treated according to the program's benefits.

What it means for you#

  • If you had past digital-asset transactions that were not properly reported, this program would let you fix those returns and pay back taxes and a program penalty instead of facing some other civil penalties.
  • Certified participants must sign a statement that violations were not fraudulent or willful; certified status gives lower penalty rates and a shorter lookback period.
  • You must apply to the program and generally file amended returns within 24 months after the program begins and pay the tax owed plus interest and the program penalty, or arrange an installment plan.
  • The Secretary may not use properly disclosed information to refer uncertified participants for criminal investigation or certain prosecutions, according to the bill text.

Expenses#

  • The bill requires participating taxpayers to pay the aggregate tax deficiency (including interest) attributable to digital assets violations and a digital assets violation penalty. Penalty rates differ by certified status and by timing of amended returns; the bill specifies percentage rates and per-year thresholds.
  • The Secretary may charge a reasonable fee to apply to the program.
  • No publicly available information on estimated administrative costs, budgetary effects, or net revenue impact is provided in the bill text or metadata.

Proponents' View#

No publicly available information.

Opponents' View#

No publicly available information.