Digital Assets Voluntary Disclosure Program Act

This bill directs the Secretary of the Treasury to establish a Digital Assets Voluntary Disclosure Program within 12 months of enactment, allowing eligible taxpayers to remedy past digital assets tax violations by meeting specific remedial requirements in exchange for reduced penalties and limited protection from criminal prosecution.

Sec. 2, Establishment of program: The Secretary must create a program for eligible taxpayers to fix digital assets violations. Uncertified eligible taxpayers must submit an application, file amended returns within 24 months of the program's start, pay the full tax deficiency plus interest and a digital assets violation penalty, and meet other requirements. Certified eligible taxpayers must do the same but do not need to submit an application. The Secretary may charge a reasonable application fee.

Sec. 2, Benefits: If remedial requirements are met, uncertified eligible taxpayers get a waiver of further penalties under sections 6662 and 6663 for properly disclosed violations, and the Secretary cannot use disclosed information for criminal referral or prosecution under sections 7201, 7203, or 7206(1) or (3). Certified eligible taxpayers only get a waiver of further penalties under section 6662.

Sec. 2, Definitions: An eligible taxpayer is either uncertified (does not certify violations were not fraudulent or willful) or certified (certifies under penalty of perjury that no violation was fraudulent or willful). A digital assets violation is any failure to comply with the Internal Revenue Code related to digital assets ownership or transactions. Digital asset means a digital value recorded on a cryptographically secured distributed ledger. The applicable period starts with the later of the first taxable year affected by a violation or the first year a return was filed in the prior 6 years (3 years for certified taxpayers), and ends with the last taxable year before enactment. The digital assets violation penalty is 25% of the first $25,000 of tax deficiency per year plus 40% of any excess for uncertified taxpayers, and 0% of the first $25,000 plus 5% of any excess for certified taxpayers. Higher rates apply if amended returns are filed after 12 months from program establishment. The Secretary may waive part or all of the penalty for justice or reasonable cause.

Sec. 2, Other provisions: Tax deficiencies and penalties are assessed and collected like other taxes under section 6665(a). The Secretary may issue regulations to carry out the program, including assurances that properly disclosed information will not be used against taxpayers.