US lawmakers are considering a targeted tax fix for crypto investors who failed to report digital asset activity in prior years. A provision tucked into the Digital Asset Tax Certainty Act (H.R. 10357) would create a crypto-specific voluntary disclosure pathway, potentially offering clearer penalty treatment for non-willful mistakes.
The measure, introduced as Section 502, has advanced in the House. The House Ways and Means Committee approved the bill on Sept. 16 by a 38-5 vote, but it still must pass the full House and Senate and then be signed by the president before it becomes law.
Key takeaways
- Section 502 would establish a Digital Asset Voluntary Disclosure Program within 12 months after the bill becomes law.
- Eligible taxpayers could submit amended returns and pay tax due plus interest and a program penalty.
- The proposal differentiates between taxpayers who certify their violations were not fraudulent or willful and those who do not.
- The bill would offer additional relief beyond amended filings by providing civil penalty relief and limiting criminal referral risk for covered offenses when disclosures are properly made.
- Accountants and advocates argue existing IRS options do not give most non-willful crypto investors a predictable, standardized correction process.
A compliance gap amplified by new reporting
Crypto investors in the US are already adjusting to heightened scrutiny under the first filing season governed by the IRS’s 1099-DA broker reporting rules. Those rules are designed to give the IRS greater visibility into crypto transactions going forward. However, according to Andrew Gordon, executive director of Digital Asset Tax Action, they don’t solve a separate problem: what taxpayers should do about previous years.
Gordon says many investors made reporting errors in earlier periods, and current correction procedures don’t provide a reliable expectation of outcome for “honest mistakes.” He notes that the issue can remain hidden for years—particularly when investors misunderstand how tax applies to crypto-to-crypto trades or manage reporting across multiple exchanges and wallets.
That “no good way to fix it” dynamic matters now because taxpayers are preparing returns with better data going forward, but they may still be uncovering gaps from earlier activity. As Gordon describes it, the absence of a crypto-specific framework can leave ordinary investors without a clear route to bring their filings into compliance.
How existing IRS voluntary disclosure rules differ
At present, the IRS offers a broader Voluntary Disclosure Practice intended primarily for taxpayers who willfully violated tax laws and face potential criminal exposure. According to the IRS’s description of the practice, it is aimed at that higher-risk category rather than providing a routine, investor-friendly correction mechanism for typical non-willful errors.
For ordinary filing mistakes, taxpayers can file amended returns. But practitioners say the penalty results can be less predictable. Sharon Yip, a certified public accountant and founder of Crypto Tax Advisors, told Magazine that reporting errors among everyday crypto users are common—such as when clients delayed reporting until they cashed out, used incomplete exchange records, or misclassified the tax treatment of certain transactions.
In her view, what’s missing is a standardized process that offers non-willful taxpayers a clearer resolution and more predictable penalty treatment if they come forward voluntarily. A crypto-specific program, she said, could “fill this gap” by creating a defined correction window and more certainty for taxpayers who proactively act.
What Section 502 would allow—and the penalty structure
Under Section 502, the bill would generally require eligible taxpayers to file amended returns within 24 months of the program being established. The provision sets out two penalty “tracks,” with different outcomes depending on how taxpayers certify the nature of their violations.
Lower penalty track (certified non-fraud, non-willful): Taxpayers who certify under penalty of perjury that their violations were neither fraudulent nor willful would face a 0% penalty on the first $25,000 of tax deficiency per year and a 5% penalty on amounts above that, provided they file within the program’s first 12 months.
Higher penalty track (no such certification): Taxpayers who do not certify would face a 25% penalty on the first $25,000 of tax deficiency per year and 40% on amounts above that. The rates would increase if taxpayers miss the initial time window.
Beyond the program penalty, the bill also includes relief from specified civil penalties. It further provides a measure of protection against criminal referrals based on information properly disclosed for the covered tax offenses under the provision.
For taxpayers, the practical implication is that the program could turn compliance into a more structured “look back” exercise rather than an open-ended process. Yip advises taxpayers to review their transaction histories across exchanges and wallets before deciding which years require corrections—and to confirm whether their situation genuinely fits within the “non-willful” category. Because the proposal hinges on certifications made under penalty of perjury, she cautions that investors who are unsure should seek professional guidance.
Why timing matters for crypto taxpayers
The proposed program lands at a moment when many investors are only beginning to fully grapple with tax implications under modern reporting. CoinTracker and Coinbase found in a 2026 report that only 49% of respondents correctly understood that selling crypto can trigger a taxable event. That kind of knowledge gap can help explain why some non-compliance may be unintentional—yet still creates real tax liabilities.
Even with new broker reporting rules improving visibility from here forward, the bill’s core premise is that earlier years remain messy and difficult to remediate with confidence. A crypto-specific voluntary disclosure program would be designed to offer taxpayers a predictable pathway to correct past issues, rather than forcing individuals to navigate uncertainty about penalties and enforcement risk.
For now, the key question is whether Section 502 survives the remaining legislative steps and how taxpayers and advisors will interpret the eligibility standards once details are finalized. If the program becomes law, investors should watch for the IRS implementation timeline, the guidance on qualifying certifications, and how the penalty tracks apply in real-world amended returns.
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