Bitcoin IRS Tax Amnesty...Sort Of

The IRS has trained its criminal agents to pursue Bitcoin and other digital currencies. The IRS is using tracking software, and the IRS successfully went after Coinbase accounts via summons. And more IRS enforcement is surely on the way. Yet there has long been speculation that a special IRS amnesty program will be announced for Bitcoin and other digital currencies. Even government officials have mentioned the idea, but so far, it hasn't arrived. Without a formal amnesty, you can still amend a few returns to pick up additional income you failed to report. But some people are reluctant. A more predictable tax and penalty result is what IRS amnesty programs usually provide.

If the IRS finds you first though an audit, you won't be protected. But some people are not comfortable just preparing and filing a few amended tax returns to correct mistakes. For more serious transgressions, traditionally, if you voluntarily go to the IRS to correct your tax problems before the IRS discovers them, you won't be prosecuted. Still, one can feel pretty vulnerable with a powerful agency like the IRS.

Although there is not a special IRS amnesty for crypto, there is one for offshore accounts. If you have an offshore account, the IRS amnesty can offer crypto investors a back door. With extensive data swapping deals between the IRS, foreign governments, and foreign banks, almost no offshore account is secret any more. Yet, offshore account holders can safely fix their problems, even if they intentionally evaded reporting in the past. The cost of the IRS amnesty can be small compared to the risk of vastly larger civil penalties or prosecution. Civil FBAR penalties alone can wipe out foreign accounts.

Read more here... https://www.forbes.com/sites/robertwood/2018/01/26/bitcoin-irs-tax-amnesty-sort-of/#2bf65ca565ca