Taxpayers facing crypto reporting issues in the United States have gained new clarity regarding case resolution timelines. The US tax authority, the Internal Revenue Service (IRS), is overhauling its voluntary disclosure program with plans to reduce penalties and expedite tax dispute resolutions, including crypto asset transactions. IRS Criminal Investigation Chief Jarod Koopman confirmed that the update is targeted to take effect before December 2026.
The benchmark timeline set by tax authorities is notably swift: cases are targeted for resolution within 120 days. That clock begins ticking after taxpayers submit complete filing documentation to the tax agency. This new target significantly cuts down the previous process, which could take a year or longer to reach a resolution.
In addition to shorter timelines, penalty amounts under the new rules are set to be significantly lower than existing requirements. Taxpayers may also be considered for flexible payment options, such as installment plans or an offer in compromise. However, this penalty relief and expedited timeline come with strict boundaries regarding their implementation mechanism.
No Special Track for Digital Assets
Koopman outlined his agency’s official position while speaking before the UCLA Extension Tax Controversy Conference. He emphasized that the IRS is not creating a dedicated track for digital assets. Crypto transactions will be processed through the same general voluntary disclosure mechanism as other tax disputes, without separate treatment.
Eligibility criteria for the voluntary disclosure program also feature clear legal boundaries. The policy is intended for willful failure to report that puts taxpayers at risk of criminal prosecution. Inadvertent technical errors are not covered under this voluntary disclosure program.
Different Direction for Tax Bill in Congress
Provisions for unintentional mistakes are being addressed through a separate legislative track. The US Congress is currently drafting Section 502 of the Digital Asset Tax Certainty Act. The draft legislation was approved by the Ways and Means Committee in September 2026.
Section 502 proposes a dedicated penalty amnesty program directly targeting inadvertent crypto asset reporting errors. This legislative scheme separates taxpayers who erred due to technical hurdles from the criminal enforcement mechanisms handled by IRS criminal investigators.
For crypto holders in the United States, the separation of these two policies clarifies the legal avenues available. Market participants who willfully failed to report transactions have a 120-day resolution window with lower penalties before facing criminal charges, while those with unintentional reporting errors are still awaiting formal legislative enactment from Congress.
Reported via Cointelegraph.
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
