Digital Assets Voluntary Disclosure Program Act

Not later than 12 months after the date of the enactment of this Act, the Secretary shall establish the Digital Assets Voluntary Disclosure Program (hereinafter referred to as the program) to allow eligible taxpayers to remedy digital assets violations by fulfilling the remedial requirements described in subsection (b).

The remedial requirements of this subsection are fulfilled if, at such time and in such manner as the Secretary determines appropriate— For purposes of paragraph (1)(A), the Secretary may impose a reasonable fee for submission of an application to participate in the program.

(1) in the case of an uncertified eligible taxpayer, such taxpayer—

(A) submits an application to participate in the program,

(B) files, not later than 24 months after the date on which the Secretary establishes the program, an amended return for each applicable taxable year with respect to which the proper amount of any tax item is affected by any digital assets violation,

(C) notwithstanding the expiration of any period of limitation on assessment, provides immediate payment, or enters into (and is in compliance with) an installment agreement under section 6159 to provide payment, of—

(i) the aggregate amount of the deficiency of tax (including any interest thereon) attributable to all digital assets violations, and

(ii) the digital assets violation penalty, and

(D) fulfills such other requirements, and provides such other information, as the Secretary determines appropriate, and

(2) in the case of a certified eligible taxpayer, such taxpayer fulfills the requirements of subparagraphs (B), (C), and (D) of paragraph (1).

If the remedial requirements described in subsection (b) have been fulfilled to the satisfaction of the Secretary—

(1) in the case of an uncertified eligible taxpayer—

(A) payment of the digital assets violation penalty under subsection (b)(1)(C)(ii) shall waive all further penalties under sections 6662 and 6663 with respect to any deficiency of tax attributable to any digital assets violation properly disclosed by the taxpayer under the program, and

(B) the Secretary shall not use any information properly disclosed by the taxpayer under the program for purposes of referring such taxpayer for criminal investigation, or prosecuting such taxpayer, under section 7201, 7203, or 7206 (other than paragraph (2) thereof) with respect to any digital assets violation properly disclosed by the taxpayer under the program, and

(2) in the case of a certified eligible taxpayer, payment of the digital assets violation penalty under subsection (b)(1)(C)(ii) shall waive all further penalties under section 6662 with respect to any deficiency of tax attributable to any digital assets violation properly disclosed by the taxpayer under the program.

For purposes of this section—

The term eligible taxpayer means any uncertified eligible taxpayer or certified eligible taxpayer.

The term uncertified eligible taxpayer means any taxpayer who—

(i) committed any digital assets violation during the applicable period,

(ii) does not certify, under penalty of perjury, that no digital assets violation occurring during the applicable period was committed fraudulently or willfully, and

(iii) if subject to— has been issued a waiver by the Secretary to nonetheless participate in the program.

(I) any ongoing criminal investigation with respect to any digital assets violation, or

(II) any ongoing audit or examination by the Internal Revenue Service with respect to any applicable taxable year,

The term certified eligible taxpayer means any taxpayer who—

(i) committed any digital assets violation during the applicable period,

(ii) certifies, under penalty of perjury, that no digital assets violation occurring during the applicable period was committed fraudulently or willfully, and

(iii) if subject to any ongoing audit or examination by the Internal Revenue Service with respect to any applicable taxable year, has been issued a waiver by the Secretary to nonetheless participate in the program.

The term digital assets violation means, with respect to any eligible taxpayer, any instance in which such taxpayer failed to comply with a requirement under the Internal Revenue Code of 1986 if—

(i) such instance relates to the ownership of, or transactions in, digital assets during the applicable period, and

(ii) such failure affects the proper amount of any tax item with respect to any applicable taxable year.

For purposes of subparagraph (A), the term digital asset means, except as otherwise provided by the Secretary, any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary.

The term applicable period means, with respect to any eligible taxpayer, the period—

(A) beginning with the later of—

(i) the taxpayer’s first taxable year with respect to which the proper amount of any tax item is affected by any digital assets violation, or

(ii) the taxpayer’s first taxable year with respect to which a return of tax was filed during the 6-year period (3-year period in the case of a certified eligible taxpayer) immediately preceding the date of the enactment of this Act, and

(B) ending with the taxpayer’s last taxable year ending before the date of the enactment of this Act.

The term applicable taxable year means, with respect to any eligible taxpayer, any taxable year during the applicable period with respect to such taxpayer.

The digital assets violation penalty is an amount equal to the sum of—

(i) 25 percent (0 percent in the case of a certified eligible taxpayer) of the aggregate amount of so much of the deficiency of tax attributable to all digital assets violations as does not exceed $25,000 with respect to each applicable taxable year, plus

(ii) 40 percent (5 percent in the case of a certified eligible taxpayer) of the aggregate amount of so much of the deficiency of tax attributable to all digital assets violations as exceeds $25,000 with respect to each applicable taxable year.

In the case of an amended return with respect to any applicable taxable year filed after the date that is 12 months after the date on which the Secretary establishes the program, subparagraph (A) shall be applied with respect to such applicable taxable year—

(i) by substituting 40 percent in lieu of 25 percent in clause (i) thereof,

(ii) by substituting 5 percent in lieu of 0 percent in clause (i) thereof,

(iii) by substituting 50 percent in lieu of 40 percent in clause (ii) thereof,

(iv) by substituting 10 percent in lieu of 5 percent in clause (ii) thereof, and

(v) in the case of a certified eligible taxpayer, by substituting $100,000 in lieu of $25,000 each place it appears.

The Secretary may waive part or all of the digital assets violation penalty to the extent the Secretary determines that such a waiver would be in the interests of justice and the proper administration of the internal revenue laws, including in cases involving digital assets violations attributable to reasonable cause (as determined by the Secretary).

The term Secretary means the Secretary of the Treasury or the Secretary’s delegate.

For purposes of this section, any deficiency of tax or digital assets violation penalty shall be assessed, collected, and paid in the same manner as taxes, as provided in section 6665(a) (without regard to any restrictions on assessment described in section 6213).

Except as otherwise expressly provided, whenever in this section a reference is made to a section, the reference shall be considered to be made to a section of the Internal Revenue Code of 1986.

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including with respect to the provision of reasonable assurances to taxpayers that any information properly disclosed under the program shall not be used in contravention of any benefit described in subsection (c).