US Bill Would Give Crypto Investors a Way to Fix Past Tax Mistakes
A provision buried inside a sweeping digital asset tax bill could hand millions of US crypto holders a genuine lifeline. Section 502 of the Digital Asset Tax Certainty Act (H.R. 10357) would direct the Treasury Secretary to create a dedicated Digital Asset Voluntary Disclosure Program, giving taxpayers who made honest mistakes a structured, penalty-reduced path to get right with the IRS, something that simply does not exist today. If you've ever wondered how crypto is taxed in the US and quietly realised you may have got it wrong in prior years, this is the development to watch.
What Section 502 Actually Proposes
The Digital Asset Tax Certainty Act cleared the House Ways and Means Committee by a 38-to-5 vote on 16 September 2026. The bill has not become law; it still needs a full House vote, Senate approval, and the president's signature. But the committee margin signals meaningful bipartisan appetite for crypto-specific tax reform.
Section 502 would require Treasury to stand up the voluntary disclosure program within 12 months of enactment. Once live, eligible taxpayers would generally have 24 months to file amended returns, pay the tax they actually owed, plus interest, and a program-specific penalty that is far lower than standard IRS enforcement rates.
The Two Penalty Tracks
The bill sets out two distinct penalty structures, and the difference between them is significant.
Track 1: Non-willful certification. Taxpayers who sign under penalty of perjury that their violations were neither fraudulent nor willful would face a 0% penalty on the first $25,000 of tax deficiency per year, and just 5% on amounts above that threshold, provided they file within the program's first 12 months. Miss that window and rates rise, so timing matters.
Track 2: No certification. Taxpayers who cannot or choose not to certify face steeper rates: 25% on the first $25,000 of deficiency and 40% on anything above. Even so, this track still offers protection from criminal referral based on information properly disclosed within the program, a meaningful safeguard that the IRS's existing procedures do not reliably provide for ordinary investors.
Both tracks also include relief from certain specified civil penalties beyond the deficiency itself.
Why This Fills a Real Gap
The IRS already runs a Voluntary Disclosure Practice, but that programme is designed for taxpayers who wilfully broke the rules and face potential criminal exposure. It is not built for the retail investor who misunderstood whether a crypto-to-crypto swap triggered a taxable event, or who relied on incomplete exchange records when filing. Today, that investor can file amended returns, but there is no predictable penalty framework and no guarantee of how the IRS will treat them.
Andrew Gordon, executive director of Digital Asset Tax Action, told Cointelegraph Magazine that existing procedures give taxpayers with honest mistakes "no good way to fix it." He pointed to two common scenarios: investors who misread the tax treatment of token-to-token trades, and those who missed transactions spread across multiple platforms. Sharon Yip, a CPA and founder of Crypto Tax Advisors, echoed the concern, noting that some clients believed no tax was owed until they converted back to fiat, while others worked from incomplete exchange records or misclassified transaction types. Neither profile fits the willful evader, yet neither currently has a clear, predictable resolution path.
Why New Broker Reporting Rules Make This Urgent Now
The 2026 filing season is the first in which expanded broker reporting requirements give the IRS far greater visibility into crypto transactions. Exchanges now report more transaction data directly to the agency, which means the IRS can cross-reference what you filed against what your broker reported, including for prior years where discrepancies already exist on the agency's systems.
Gordon acknowledged that the new broker rules should make prospective reporting more straightforward, but they do nothing for the years before they took effect. That historical gap is exactly where Section 502 would operate. For taxpayers who know, or suspect, they under-reported in earlier years, a voluntary correction before the IRS makes contact is almost always preferable to waiting for an audit notice.
The Perjury Warning You Cannot Ignore
The lower penalty track under the non-willful certification carries a serious caveat: the certification is made under penalty of perjury. Falsely claiming a violation was non-willful when it was not is itself a federal offence, and the consequences would be worse than the original reporting error. Yip advises any taxpayer considering this route to review their full transaction history across every exchange and wallet they have used, identify which tax years are affected, and get independent professional advice before certifying anything.
How Crypto Tax Works in the US: The Baseline
Understanding where the voluntary disclosure program fits requires a clear picture of how crypto is taxed in the US generally. The IRS treats digital assets as property. Every disposal, including selling crypto for fiat, swapping one token for another, spending crypto on goods or services, or receiving it as income, is potentially a taxable event.
Capital Gains vs. Ordinary Income
Gains on assets held for more than 12 months qualify for long-term capital gains rates, which are lower than ordinary income rates. Assets held for 12 months or less are taxed as short-term gains, at ordinary income rates. Mining rewards, staking income, airdrops, and certain DeFi yields are generally treated as ordinary income at the fair market value on receipt.
The complexity multiplies quickly when a single wallet interacts with dozens of protocols across a tax year. Keeping accurate cost-basis records across multiple exchanges is the core challenge for most retail filers, and it is precisely where unintentional errors accumulate.
What This Means If You're an Individual Filer
If you think you may have under-reported crypto gains or income in any prior year, do not wait for the bill to become law before starting your own review. The work of pulling transaction records from every platform, calculating the correct gain or loss on each disposal, and quantifying the actual tax deficiency can take time, especially if you traded frequently or used multiple wallets and exchanges.
Practical Steps to Take Now
First, request your full transaction history from every exchange you've used. Most platforms provide downloadable CSV files or allow API exports. Second, reconcile those records against the returns you filed. Look specifically for crypto-to-crypto swaps, which many early filers treated as non-taxable, and for any staking or airdrop income that may have been omitted. Third, calculate the approximate tax deficiency for each affected year, keeping in mind that interest accrues from the original due date. Finally, speak to a qualified tax professional before taking any formal step. The difference between a non-willful and a willful classification is a legal question, not an accounting one, and the stakes are high.
A dedicated crypto tax report covering each affected year is the foundation of any amended filing, regardless of whether a formal program eventually exists.
What This Means for Accounting Firms and CFOs
For practitioners advising clients on US digital asset positions, Section 502 is the clearest signal yet that Congress expects significant historical under-reporting and is trying to create a managed resolution mechanism rather than a wave of enforcement actions.
Firms should begin proactively reviewing clients' prior-year digital asset disclosures now. Where gaps or classification errors are identified, documenting the factual basis for a non-willful determination is critical before any amended filing is submitted. The 24-month window the bill envisions will move faster than it looks, especially given the workload of pulling multi-year, multi-platform records.
CFOs overseeing treasury functions that include digital assets should also assess whether corporate crypto transactions in prior years were correctly reported. The voluntary disclosure concept applies to entities as well as individuals, and an internal audit of historical reporting is cheaper than a penalty assessment. For context on the wider legislative trajectory affecting US crypto reporting, our coverage of the Digital Asset Tax Certainty Act's broader provisions and the 38-5 committee vote sets out the full landscape.
What Happens Next
The bill still faces a full House floor vote, then the Senate, before any presidential signature. Legislative timelines in Congress are inherently uncertain, and amendments are possible at each stage. Section 502 could be retained, modified, or stripped out entirely before the bill reaches the president's desk. The 12-month implementation clock for Treasury also means the program would not be operational immediately upon enactment.
That said, the committee vote and the bipartisan framing suggest genuine momentum. Practitioners and individual filers alike should treat the proposal seriously enough to begin preparatory work now, while accepting that the specific penalty rates and timelines remain subject to change until the bill is signed into law.
Frequently Asked Questions
What is the Digital Asset Voluntary Disclosure Program proposed in H.R. 10357?
Section 502 of the Digital Asset Tax Certainty Act would instruct the Treasury Secretary to create a program specifically for crypto taxpayers who made non-willful reporting errors in prior years. Participants would file amended returns, pay the tax owed plus interest, and face a reduced program penalty rather than standard IRS enforcement rates.
How is crypto taxed in the US, and why do so many filers get it wrong?
The IRS treats digital assets as property, meaning every disposal, including swapping one token for another, is a taxable event. Gains are subject to short-term or long-term capital gains rates depending on holding period, and tokens received as income are taxed at ordinary rates. The complexity of tracking cost basis across multiple exchanges and wallets is the main source of honest errors.
What is the difference between the two penalty tracks in Section 502?
Taxpayers who certify under penalty of perjury that their violations were non-willful face 0% on the first $25,000 of deficiency per year and 5% above that if they file in the program's first 12 months. Those who do not certify face 25% on the first $25,000 and 40% above, with rates rising if they miss the initial window. Both tracks include protection from criminal referral for properly disclosed violations.
Does the bill protect me from criminal prosecution?
Both tracks under Section 502 shield taxpayers from criminal referral based on information they properly disclose within the program for the tax offences covered. However, falsely certifying that a violation was non-willful when it was not is itself a federal crime and would carry its own serious consequences.
Is the program available now, and should I wait for it before correcting my crypto taxes?
No. The bill has not become law; it still needs a House floor vote, Senate passage, and a presidential signature. Even if enacted, Treasury would have 12 months to establish the program. Starting your transaction-history review now is advisable regardless, because amended returns can be filed under existing rules, and early voluntary correction is generally viewed more favourably by the IRS than waiting for an inquiry.
Source: Cointelegraph Magazine