Digital Assets Disclosure Act (H.R. 9174)

Summary

Creates a program for taxpayers to fix past tax mistakes related to digital assets, pay owed taxes and a penalty, and avoid more severe penalties or jail time.

What problem does this solve?

Many taxpayers are confused about how to report taxes on digital assets, leading to widespread mistakes. This bill creates a clear process for people to fix their past tax filings and pay what they owe without facing harsh punishments.

What does this bill do?

Establishes a Digital Assets Voluntary Disclosure Program

Requires the Secretary of the Treasury to create a program within 12 months for taxpayers to voluntarily report and correct past tax violations related to digital assets.

Creates two types of eligible taxpayers

Defines 'certified' taxpayers who swear their violations were not willful, and 'uncertified' taxpayers who do not. The penalties and protections differ between the two groups.

Defines specific penalties for violations

Sets penalties based on the amount of unpaid tax. Certified taxpayers face lower penalties (0-5%) than uncertified taxpayers (25-40%), with rates increasing after 12 months.

Offers protection from criminal charges

Prevents the Secretary from using information disclosed in the program to refer uncertified taxpayers for criminal investigation or prosecution for certain tax crimes.

Waives other tax penalties

Waives further penalties for fraud or accuracy issues for taxpayers who complete the program and pay the specific digital assets violation penalty.

Defines 'digital asset' for tax purposes

Defines a digital asset as any digital representation of value recorded on a cryptographically secured distributed ledger, like a blockchain.

Who does this affect?

Digital asset and cryptocurrency owners
The Internal Revenue Service (IRS)
Tax professionals

What is the real world impact?

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Provides a clear path for confused taxpayers

Tax rules for crypto have been confusing. This program gives people who made honest mistakes a way to fix their records without facing harsh penalties or criminal investigation, encouraging them to come forward.

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Increases tax revenue from digital assets

Creates a pathway for the government to collect unpaid taxes from cryptocurrency and other digital asset transactions. This helps close the tax gap and brings more people into compliance without expensive audits.

When does this start?

This bill sets several deadlines for creating the program and for taxpayers to participate.

Program establishment deadline

The Secretary of the Treasury must establish the disclosure program no later than 12 months after the bill becomes law.

Deadline for filing amended returns

Taxpayers must file amended returns for all applicable years within 24 months after the program is established.

Penalty increase date

Penalties for participants increase if they file their amended tax returns more than 12 months after the program is established.