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What Happens If You Don't Report Crypto on Your Taxes?Failing to report your cryptocurrency holdings on your taxes can result in a number of penalties, including fines and even jail time. The. If you don't, you're subject to the same civil and criminal liabilities for not reporting capital gains. The anonymous and decentralized nature. The IRS is perfectly clear crypto is taxed and failure to report crypto on your taxes may result in steep penalties. The punishments the IRS can levy against.