{"id":2138,"date":"2026-10-19T14:18:54","date_gmt":"2026-10-19T14:18:54","guid":{"rendered":"https:\/\/smartcryptosecurity.com\/?p=2138"},"modified":"2026-10-19T14:18:54","modified_gmt":"2026-10-19T14:18:54","slug":"us-congress-advances-bill-offering-potential-relief-for-crypto-investors-with-past-reporting-errors","status":"publish","type":"post","link":"https:\/\/smartcryptosecurity.com\/?p=2138","title":{"rendered":"US Congress Advances Bill Offering Potential Relief 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 years may soon find a clear pathway to compliance, thanks to a legislative measure currently making its way through the US Congress. The developing policy aims to address a long-standing structural gap in the American tax system, offering a structured resolution mechanism for individuals who made honest mistakes or lacked clear guidance during the early years of the digital asset economy.<\/p>\n

At the center of this legislative movement is Section 502 of the Digital Asset Tax Certainty Act, designated as H.R. 10357. If enacted into law, this specific provision would mandate that the United States Treasury secretary establish a comprehensive Digital Asset Voluntary Disclosure Program within a 12-month window following the official enactment of the bill. This program would serve as a formal avenue allowing eligible taxpayers to correct any past digital asset tax violations. Participants would be permitted to file amended returns and pay the underlying tax owed, alongside required interest and a designated program penalty, effectively regularizing their tax standing with the federal government.<\/p>\n

The legislative process has already seen notable momentum in the House of Representatives. On Sept. 16, the House Ways and Means Committee officially approved the bill by a decisive 38-5 vote. Despite this substantial bipartisan committee approval, the measure has not yet become law. It still faces the requirement of passing both the full House and the Senate before it can be presented to the president for a final signature. <\/p>\n

Andrew Gordon, the executive director of Digital Asset Tax Action, highlighted the potential significance of the proposed measure while speaking to industry media. He noted that the initiative represents a substantial modification that would provide meaningful assistance to a large number of ordinary taxpayers, yet it has managed to fly largely under the radar, attracting very little public attention thus far.<\/p>\n

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

The advancement of H.R. 10357 arrives at a time when US crypto investors are already navigating their first filing season under newly implemented regulatory frameworks. Specifically, the market is adjusting to the 1099-DA broker reporting rules, which grant the Internal Revenue Service unprecedented visibility into day-to-day cryptocurrency transactions and exchange activities. <\/p>\n

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While industry observers generally agree that these new reporting mandates will streamline tax compliance moving forward, Gordon points out that they leave a critical void regarding historical transactions executed before the rules came into effect. According to Gordon, a remarkably large share of retail investors failed to report their crypto activities correctly over the past several years. Furthermore, the existing administrative procedures fail to offer taxpayers who made genuine, non-willful mistakes a predictable and standardized way to resolve their historical tax liabilities.<\/p>\n

Elaborating on the current predicament, Gordon explained that today, an average crypto investor who discovers they did not properly report their holdings or omitted reporting entirely has no reliable, straightforward mechanism to fix the issue. Many individuals routinely discover years after the fact that they completely misunderstood the complex tax treatment governing crypto-to-crypto trades, or that they mismanaged the accounting of activity spanning multiple disparate trading platforms and decentralized finance applications.<\/p>\n

What Taxpayers Could Get<\/p>\n

To understand the necessity of the proposed program, industry experts point to the limitations of existing federal tax administration tools. The IRS currently operates a formal Voluntary Disclosure Practice, but this mechanism is primarily tailored toward individuals who willfully and intentionally violated tax rules and consequently face potential criminal exposure and severe legal consequences. <\/p>\n

For taxpayers who simply possess errant reporting skills or struggled to understand ambiguous guidance, correcting mistakes currently involves filing amended returns through standard channels. However, the resulting penalty treatment under standard procedures lacks predictability, standing in sharp contrast to the structured, crypto-specific program outlined in provision 502. <\/p>\n

Sharon Yip, a certified public accountant and the founder of Crypto Tax Advisors, emphasizes that reporting errors among ordinary, non-professional crypto users are exceptionally common. Drawing from her firm’s direct practical experience, Yip notes that various clients historically neglected to report their crypto transactions simply because they firmly believed no taxable event occurred until they formally converted their digital assets back into fiat currency, such as US dollars. Other investors relied on incomplete or confusing transaction records provided by centralized exchanges or inadvertently misclassified complex transaction types.<\/p>\n

Yip pointed out that there is currently no standardized process that guarantees non-willful crypto investors predictable penalty treatment or a clear path toward permanent resolution. In her view, a dedicated, crypto-specific voluntary disclosure program could successfully fill this regulatory gap. Such an initiative would provide a clearly defined correction period, reduced and predictable penalties, and much-needed legal and financial certainty for everyday taxpayers who decide to step forward voluntarily.<\/p>\n

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

Under the terms specified in Section 502, participating taxpayers would generally be required to file their amended returns within 24 months of the official establishment of the voluntary disclosure program. The proposed legislation establishes two distinct penalty tracks depending on the intent and good faith of the participating individual.<\/p>\n

Significantly lower rates are designated for taxpayers who certify under penalty of perjury that their historical tax violations were neither fraudulent nor willful. Individuals who qualify under this non-willful track would face a 0% penalty on the first $25,000 of tax deficiency per year, and a modest 5% penalty on any amounts exceeding that threshold, provided they submit their amended filings within the first 12 months of the program’s operation. <\/p>\n

Conversely, for taxpayers who do not make this certification, much harsher financial terms apply. Rates of 25% on the first $25,000 of tax deficiency and 40% on amounts above that level would be enforced, with these rates escalating further if taxpayers fail to meet the initial operational window of the program. <\/p>\n

In addition to these financial tracks, the bill includes provisions offering relief from specific civil penalties. Furthermore, taxpayers who complete the certification process are granted protection from criminal referrals stemming directly from the information properly disclosed for the specific tax offenses covered under the provision. <\/p>\n

Yip advises that before attempting to utilize such a program, taxpayers should meticulously review their transaction histories across all historical exchanges, hardware wallets, and protocols to identify precisely which filing years require correction. This meticulous review is necessary before assessing whether their historical missteps qualify as genuinely non-willful. Because making a false certification carries severe legal consequences under the penalty of perjury, she strongly encourages individuals to seek professional guidance whenever they feel uncertain about their reporting history.<\/p>\n

The potential introduction of Section 502 offers a welcome prospect of relief for a substantial portion of the US cryptocurrency community. The scale of the underlying educational gap is underscored by a 2026 industry report published by CoinTracker and Coinbase, which revealed that only 49% of surveyed crypto users correctly understood that simply selling cryptocurrency can constitute a taxable event. As Congress continues to weigh the merits of H.R. 10357, millions of participants in the digital asset economy await a clearer, more forgiving roadmap toward full tax compliance.<\/p>\n","protected":false},"excerpt":{"rendered":"

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