IRS Plans Faster Crypto Tax Disclosure and Lower Penalties
The IRS plans to overhaul its Voluntary Disclosure Program before December, potentially lowering penalties and offering installment plans or offers in compromise to taxpayers who disclose past violations, including unreported crypto income. IRS Criminal Investigation Chief Jarod Koopman said the agency aims to resolve cases within 120 days after receiving complete submissions, compared with current timelines that can exceed a year. Crypto tax disclosure will use the general program, not a separate digital asset process.
The proposed changes come as custodial platforms face Form 1099-DA reporting requirements for 2025, which could make digital asset sales more visible to the IRS. Separately, the Digital Asset Tax Certainty Act has cleared the House Ways and Means Committee. One provision would allow eligible taxpayers to avoid penalties on the first $25,000 of a tax deficiency, subject to conditions. The bill is not law, and the IRS has not finalized the program’s rules or penalty levels. For traders with previously unreported trading, staking or mining income, the crypto tax disclosure overhaul could offer a faster way to address potential tax exposure.
Neutral
The news has no clear direct effect on the price of any particular cryptocurrency, so the expected market impact is neutral. In the short term, the prospect of faster resolutions and lower penalties may ease concerns among some US crypto traders, while the 2025 Form 1099-DA reporting requirements could prompt greater attention to tax records and compliance. These developments may affect trading behavior and sentiment, but they do not change the underlying supply, demand or utility of a specific token. Over the longer term, clearer disclosure procedures could reduce uncertainty around crypto tax compliance and support broader participation. However, the IRS program details are not final, and the proposed tax legislation is not law; market reactions are therefore likely to remain limited unless implementation or enforcement meaningfully changes.