The Internal Revenue Service (IRS) announced on the 23rd that it plans to significantly overhaul its tax reporting program to include digital‑asset transactions and related tax violations. The department says new regulations will be implemented before December, with a goal of resolving cases within 120 days after taxpayers submit the required documents.
Currently, the tax‑reporting system takes at least one year to process cases. Accordingly, the IRS has been looking for ways to shorten processing time and lower penalty levels. A relevant official said that penalties would be considerably lower than they are now but did not disclose specific reductions or application thresholds. The department also indicated a willingness to consider reducing penalties through partial payment or other adjustments.
Digital‑asset transaction violations are also included in the overhaul. The IRS stated it will not create separate rules for digital assets, but will apply the same procedures as for ordinary tax violations. Meanwhile, Congress is advancing its own separate measure that includes provisions for correcting non‑material reporting errors related to digital assets. The “Digital Asset Tax Certainty Act” is a bill that would allow enforcement of former violations based on established penalty criteria and contains reporting procedures, and it passed the House Committee last month.
The two measures differ in scope. The IRS overhaul focuses on improving processing speed and penalty burden for existing reporting procedures, whereas the congressional measure seeks to provide a separate framework for correcting non‑material errors. However, the IRS proposal has not yet taken effect, and penalty levels and application requirements are still undefined. Actual tax burdens for digital‑asset investors will become clearer after the final enactment of either measure.