IRS plans to reduce penalties, expedite crypto tax disclosures

Jarod Koopman: Jarod Koopman is the Chief of IRS Criminal Investigation. He outlined the agency's plans for revising the voluntary disclosure program during remarks at the UCLA Extension Tax Controversy Conference, noting that digital assets will be handled under existing procedures rather than through a new dedicated process. Internal Revenue Service: The Internal Revenue Service is the United States federal agency responsible for collecting taxes and enforcing tax laws. It is overhauling its voluntary disclosure program to reduce penalties, accelerate resolutions, and provide more flexible payment options for taxpayers with past violations, including those involving cryptocurrencies, with the updates targeted before December. Digital Asset Tax Certainty Act: The Digital Asset Tax Certainty Act is proposed legislation focused on providing greater clarity and processes for digital asset taxation. Section 502 would create a specific voluntary disclosure pathway for crypto taxpayers to address past violations, including unintentional errors, and the bill advanced through the House Ways and Means Committee in September. Regulation Update: The IRS is revising its voluntary disclosure program to lower penalties and introduce more flexible payment options such as installment plans for resolving tax issues involving cryptocurrencies. Process Streamlining: The agency aims to integrate digital asset cases into its standard voluntary disclosure procedures instead of establishing separate rules for them. Legislative Development: Lawmakers are advancing a dedicated voluntary disclosure process for crypto taxpayers through proposed legislation that addresses both willful and unintentional noncompliance.