{"id":2126,"date":"2026-10-19T14:12:46","date_gmt":"2026-10-19T14:12:46","guid":{"rendered":"https:\/\/smartcryptosecurity.com\/?p=2126"},"modified":"2026-10-19T14:12:46","modified_gmt":"2026-10-19T14:12:46","slug":"us-congress-weighs-relief-program-for-crypto-investors-with-past-reporting-errors","status":"publish","type":"post","link":"https:\/\/smartcryptosecurity.com\/?p=2126","title":{"rendered":"US Congress Weighs Relief Program for Crypto Investors With Past Reporting Errors"},"content":{"rendered":"

Crypto investors across the United States who failed to properly report digital asset trades in previous tax years may soon find a clear pathway to compliance, thanks to a legislative measure currently advancing through Congress. <\/p>\n

Section 502 of the Digital Asset Tax Certainty Act, designated as H.R. 10357, would direct the United States Treasury secretary to establish a specialized Digital Asset Voluntary Disclosure Program. Under the terms of the bill, this dedicated framework would need to be operational within twelve months of the legislation officially becoming law. <\/p>\n

The proposed program is designed to provide eligible taxpayers with a structured opportunity to correct historical digital asset tax violations. Participants would be able to rectify past oversights by filing amended tax returns and paying any underlying tax liabilities owed, alongside applicable interest and a designated program penalty. <\/p>\n

Momentum for the legislation grew when the House Ways and Means Committee approved the bill by a decisive 38-5 vote on September 16. Despite this legislative hurdle cleared in committee, the measure has not yet become law. It still requires full passage through both the House of Representatives and the Senate before it can be submitted to the president for a final signature. <\/p>\n

Andrew Gordon, executive director of Digital Asset Tax Action, highlighted the potential significance of the legislative push. In an interview, he noted that the measure represents a major change that would provide substantial assistance to many ordinary taxpayers, yet it has managed to fly largely under the radar with very little public attention.<\/p>\n

A Gap in the System<\/p>\n

American crypto investors are currently navigating their first major filing season under the recently implemented 1099-DA broker reporting rules. These regulations grant the Internal Revenue Service unprecedented visibility into individual cryptocurrency transactions, fundamentally altering how digital asset activity is monitored and reviewed. <\/p>\n

\"Made<\/figure>\n

While industry advocates acknowledge that these new broker reporting standards should streamline tax reporting moving forward, they point out a critical blind spot. The rules do not provide a retroactive solution for the years that preceded their enactment, leaving a vast historical archive of unaddressed reporting discrepancies. <\/p>\n

Gordon emphasized that a large share of everyday investors failed to report their transactions correctly over the years. Compounding the issue, existing regulatory procedures do not offer a predictable or welcoming mechanism for taxpayers who made honest mistakes to come forward and resolve their past liabilities without fear of disproportionate repercussions. <\/p>\n

He pointed out that today, a crypto investor who discovers they did not properly account for their digital assets, or who failed to file entirely, faces a frustrating landscape with no good way to fix it. Investors often realize years down the line that they fundamentally misunderstood the complex tax treatment governing crypto-to-crypto trades, or that they struggled to accurately aggregate activity spread across multiple trading platforms and decentralized applications. <\/p>\n

What Taxpayers Could Get<\/p>\n

The existing Voluntary Disclosure Practice maintained by the Internal Revenue Service is primarily structured for taxpayers who willfully violated tax rules and consequently face potential criminal exposure. For individuals whose reporting errors stemmed from confusion rather than malicious intent, the current recourse involves filing amended returns. However, the resulting penalty treatment through this traditional route remains unpredictable, lacking the standardized clarity proposed under Section 502’s crypto-specific program. <\/p>\n

Sharon Yip, a certified public accountant and the founder of Crypto Tax Advisors, noted that reporting errors among ordinary crypto participants are remarkably common. Drawing from her firm’s extensive practical experience, she observed that many clients neglected to report their digital asset holdings because they operated under the mistaken belief that no tax obligation arose until they officially cashed out into fiat currency. Other clients relied on incomplete or fragmented exchange records, or inadvertently misclassified the nature of their transactions. <\/p>\n

Yip explained that there is currently no standardized process that affords non-willful crypto investors predictable penalty treatment or a clear path toward resolution. In her view, a crypto-specific disclosure program could effectively fill this institutional gap. It would introduce a defined correction period, reduced and predictable penalties, and much-needed regulatory certainty for taxpayers who choose to come forward of their own accord. <\/p>\n

What the Bill Would Offer<\/p>\n

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Under the framework outlined in Section 502, participating taxpayers would generally be required to file their amended returns within twenty-four months of the program’s official establishment. The legislation outlines two distinct penalty tracks depending on the nature of the taxpayer’s past omissions. <\/p>\n

Significantly lower rates are reserved for taxpayers who certify, under penalty of perjury, that their past violations were neither fraudulent nor willful. Those who file within the initial twelve-month window of the program would face a 0% penalty on the first $25,000 of tax deficiency per year, and a modest 5% penalty on amounts exceeding that threshold. <\/p>\n

Conversely, for individuals who do not or cannot make this non-willful certification, steeper rates apply. These taxpayers would face a 25% penalty on the first $25,000 of deficiency and a 40% penalty on amounts above it, with these rates subject to further increases if the initial filing window is missed. <\/p>\n

The legislation also provides relief from specific civil penalties. Furthermore, taxpayers who successfully complete the certification process are protected from criminal referrals based on the information they properly disclose for the tax offenses covered under the provision. <\/p>\n

Yip advises that taxpayers should proactively review their transaction histories across various exchanges and digital wallets to identify which specific years require correction before attempting to assess whether their past mistakes were genuinely non-willful. Because making a false certification carries severe legal consequences under penalty of perjury, she strongly recommends seeking professional guidance for anyone who remains uncertain about their status. <\/p>\n

The introduction of Section 502 offers a timely and welcome prospect for many American crypto users. The urgency of addressing historical reporting gaps is underscored by broader industry findings, including a collaborative report released by CoinTracker and Coinbase, which revealed that only 49% of crypto users correctly understood that selling digital assets can constitute a taxable event.<\/p>\n","protected":false},"excerpt":{"rendered":"

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