IRS plans lower tax disclosure penalties, including for crypto: Forbes

The US Internal Revenue Service (IRS) is planning to overhaul its voluntary disclosure program, aiming to lower penalties and expedite the resolution of tax violations, including those involving cryptocurrencies, according to a report by Forbes. IRS Criminal Investigation Chief Jarod Koopman stated that the agency intends to introduce the revised program before December, with the goal of resolving cases within 120 days following taxpayers' submission of the required information.

Koopman noted that the overhaul would not introduce a separate disclosure process for digital assets, emphasizing that the IRS would handle cryptocurrencies through the same voluntary disclosure procedures applied to other forms of tax noncompliance. He also hinted that penalties under the revised program would be significantly lower than the current ones, although he did not disclose specific amounts.

The proposed changes would deviate from the existing lengthy process, which can take a year or more to complete. Currently, the IRS voluntary disclosure program is intended for taxpayers who willfully failed to comply with tax laws, posing a risk of criminal prosecution, rather than those who made unintentional reporting errors.

Lawmakers are also considering a separate voluntary disclosure program for crypto taxpayers, which would allow individuals who made unintentional reporting errors to correct past violations through a defined process, unlike the IRS’s existing program that primarily targets willful tax noncompliance.