Digital Asset Tax Certainty Act

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

(b) Remedial requirements. The remedial requirements of this subsection are fulfilled if, at such time and in such manner as the Secretary determines appropriate, the eligible taxpayer—

(1) 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 asset violation,

(2) provides immediate payment, or the Secretary accepts from such taxpayer (and does not thereafter terminate) an installment agreement under section 6159 to provide payment, of—

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

(B) the digital asset violation penalty, and

(3) timely fulfills such other requirements, and provides such other information, as the Secretary determines appropriate.

(c) Benefits. 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) the Secretary shall not assert any further penalties under sections 6662 and 6663 with respect to any deficiency of tax attributable to any digital asset 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 asset violation properly disclosed by the taxpayer under the program, and

(2) in the case of a certified eligible taxpayer, the Secretary shall not assert any further penalties under section 6662 with respect to any deficiency of tax attributable to any digital asset violation properly disclosed by the taxpayer under the program.

(d) Definitions. For purposes of this section—

(1) Eligible taxpayer

(A) In general. The term eligible taxpayer means any uncertified eligible taxpayer or certified eligible taxpayer.

(B) Uncertified eligible taxpayer. The term uncertified eligible taxpayer means any taxpayer who—

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

(ii) submits (in such form and manner as the Secretary may prescribe), not later than 24 months after the date on which the Secretary establishes the program, an application which is approved by the Secretary to participate therein,

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

(iv) if subject to— has requested and been issued a waiver by the Secretary to nonetheless participate in the program. For purposes of clause (ii), the Secretary may impose a reasonable fee for submission of an application to participate in the program.

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

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

(C) Certified eligible taxpayer. The term certified eligible taxpayer means any taxpayer who—

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

(ii) as an addendum to each amended return filed under subsection (b)(1) (or at such other time and in such other form and manner as the Secretary may prescribe), certifies, under penalty of perjury, that no digital asset 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 requested and been issued a waiver by the Secretary to nonetheless participate in the program.

(2) Digital asset violation

(A) In general. The term digital asset 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.

(B) Digital asset. 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.

(3) Applicable period. 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 asset 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.

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

(5) Digital asset violation penalty

(A) In general. The digital asset 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 asset 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 asset violations as exceeds $25,000 with respect to each applicable taxable year.

(B) Special rules for amended returns filed after certain date. In the case of an amended return with respect to any applicable taxable year filed under subsection (b)(1) 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.

(C) Waiver by Secretary. The Secretary may waive part or all of the digital asset 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 asset violations attributable to reasonable cause (as determined by the Secretary).

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

(e) Assessment authority; waiver of restrictions and limitations on assessment. For purposes of this section, any deficiency of tax, additional tax or amount, or digital asset 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 or limitations on assessment described in section 6213 or 6501).

(f) References to Internal Revenue Code of 1986. 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.

(g) Regulatory authority. 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).