The Internal Revenue Service is preparing to revise its voluntary disclosure program for taxpayers with undisclosed income, including digital-asset gains, as the agency closes the criminal tax case against early Bitcoin advocate Roger Ver after he paid roughly $49.9 million in tax, penalties and interest.
Jarod Koopman, executive director of the IRS Criminal Investigation division, said at a UCLA Extension tax controversy conference that the revised program is expected before December. The IRS aims to resolve voluntary disclosure cases within 120 days after taxpayers provide complete submissions, he said, and the penalty level would be substantially lower than under the current framework.
The timing places the planned changes alongside an unusually high-profile crypto tax resolution. Ver, widely known as Bitcoin Jesus for his early promotion of the asset, admitted that he failed to disclose all of his Bitcoin holdings and intentionally understated tax due when filing an expatriation return after giving up U.S. citizenship.
Under the settlement, Ver admitted his conduct created a tax loss of $16,864,105. He paid the assessed tax along with a civil fraud penalty and interest, leading prosecutors to seek dismissal of the case. The total payment was about $49.9 million.
Ver case centered on 2014 Bitcoin holdings
The indictment against Ver, filed in April 2024, alleged that he and two U.S. companies he controlled held about 131,000 Bitcoin in February 2014. Bitcoin was trading near $871 at the time, placing the holdings value above $114 million at that price.
Two companies, MemoryDealers and Agilestar, held about 73,000 Bitcoin, according to prosecutors. The case focused on the valuations used to calculate Ver's expatriation tax, often called the exit tax.
U.S. expatriation rules require certain individuals who relinquish citizenship or long-term residency to treat their worldwide assets as though they were sold on the day before expatriation. Any resulting gain is generally subject to capital gains tax, subject to an inflation-adjusted exclusion.
The rules apply to covered expatriates, generally including people with a net worth above $2 million, an average annual income tax liability over a specified five-year threshold, or those unable to certify five years of U.S. tax compliance. The income-tax-liability threshold is $206,000 for 2025.
Prosecutors alleged that Ver gave inaccurate information to a law firm and a valuation firm. Those representations lowered the stated value of his companies and their Bitcoin holdings, the indictment said, including an assertion that Ver personally held no Bitcoin. Authorities initially estimated the tax loss at least $48 million.
Ver was arrested in Spain after the indictment. In the eventual resolution, he admitted that his May 2016 expatriation return did not report all Bitcoin he owned and did not include the capital gains tax due from the deemed sale. He also acknowledged that the underreporting was intentional.
New disclosure rules could alter the calculation for self-reporting taxpayers
The IRS voluntary disclosure practice is designed for taxpayers who have willfully failed to meet tax obligations and want to disclose conduct before the government begins an examination or criminal investigation. Participation does not automatically eliminate penalties, but it can provide a route to resolve liabilities outside a criminal prosecution when the taxpayer makes a truthful and complete disclosure.
Koopman did not announce the exact revised penalty rate or an effective date. Under the present approach, the IRS can impose a 75% civil fraud penalty on the year with the highest tax liability, generally within a six-year disclosure period. Payment arrangements may be available in some cases.
A lower standard penalty could make voluntary disclosure more practical for taxpayers facing historic crypto-reporting problems, particularly those with trading records spread across defunct platforms, self-custodied wallets and multiple blockchains. It would not change the consequences for someone already under IRS investigation or otherwise ineligible for voluntary disclosure.
Ver's case also illustrates why the age of a transaction does not necessarily end the government's ability to assess tax. The normal assessment period is three years, and it can extend to six years when omitted gross income exceeds 25% of the amount reported. For a false or fraudulent return filed with intent to evade tax, the IRS has no assessment time limit.
Broker reporting will provide more transaction data
Digital assets are property for U.S. federal tax purposes. Selling crypto for dollars, trading one token for another, or using tokens to buy goods can each create a taxable disposition. Taxpayers generally calculate gain or loss by comparing proceeds with their cost basis and report the transaction on Form 8949 and Schedule D.
Income received through mining, staking, airdrops and some decentralized-finance activities may be taxable at the asset's fair market value when received. The specific treatment can depend on the facts of a transaction, making contemporaneous records particularly useful for taxpayers with high volumes of on-chain activity.
The IRS's Form 1099-DA reporting regime adds another layer of data. For transactions after Dec. 31, 2024, qualifying brokers must begin reporting digital-asset sales. The 2025 forms are expected to show gross proceeds, while cost-basis reporting is scheduled to begin for 2026 transactions.
Following the repeal of rules that would have expanded the broker definition to decentralized-finance providers, 1099-DA reporting will generally apply to centralized custodial platforms rather than decentralized exchanges or software protocols. That leaves taxpayers responsible for tracking taxable DeFi swaps, many NFT transactions and activity between private wallets even where no tax form is generated.
Useful records include transaction hashes, timestamps, the dollar value at the time of the transaction, acquisition dates and the cost basis assigned to each lot. Moving assets between wallets a person controls is generally not taxable, but incomplete records can make it difficult to substantiate basis when the IRS compares returns with third-party reporting.
The forthcoming disclosure changes would arrive as that reporting system begins to generate a more standardized trail of digital-asset sales. For taxpayers with unresolved historic crypto gains, the choice between organizing records and waiting for a mismatch may increasingly determine whether a case begins as a civil disclosure or an enforcement matter.
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