As if the SEC was not enough to deal with, the crypto world has another alphabet government agency to deal with.
The Internal Revenue Service (IRS) wants its money. Thus far, it has been rather lax about cryptocurrency enforcement. That is likely to change going into 2021.
Source
In the past, the focus has been upon education. Over that time, the agency took a number of steps towards helping taxpayers get in compliance. They sent out letters warning people that cryptocurrency transactions are taxable and that individuals were responsible to ensure they paid the proper amount owed.
This approach does not appear to have led to crackdown by the agency. It seems they were concerned with education as opposed to enforcement. This is changing with a box placed overtly on the 1040 return questioning whether one has cryptocurrency.
Could it see that some high profile cases start to roll out in 2021?
The agency has a history of pushing compliance by going after high profile targets. Names like Wesley Snipes and Willie Nelson are a couple of examples of what can happen when one runs afoul of the IRS. The fact that the agency went after these individuals hard shows they could go after anyone. It obviously pushes others to remain compliance.
It will be an interesting meeting with many old time crypto people and the United States tax enforcement institution. Many in crypto, especially early adopters, are of the libertarian, screw you government mindset. Cryptocurrency is believed to be something that is outside the control of any single government. After all, Bitcoin was born out of the notion of creating a currency that is not under the power of any government.
That does not mean, however, that taxes are not due upon the profits. Ultimately, the IRS could care less how one makes the money, so long as the taxes are paid. They are not worried about the other laws that could apply. Basically, they just want to be paid.
Other countries are doing the same thing. With governments running up enormous deficits, the hunt for taxes is on. Part of the reasons that they want CBDCs so badly is to be able to levy taxes in real time. Imagine having money sent to you as payment and before it hits your account, the taxes are removed? Do not think this is outside the realm of what they are thinking.
For now, the IRS is stuck going after things the old fashion way. When filing, each person will have to attest whether they own cryptocurrency or not. It is likely the agency already has the records from many of the exchanges, so a denial could be a red flag. It is presumed that anyone who checks yes will have to attach what their "trades" looked like and the profit or loss from said activities.
Remember, every transaction in crypto, according to the IRS is a taxable event. So if you buy Bitcoin then immediately sell it, you will have to state whether there was a profit or loss, no matter what size it is.
It seems the days of the IRS looking the other way (or more accurately not looking at all) are over. 2021 could see the agency move towards stronger enforcement against crypto users.
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I doubt they'll be able to tax all crypto users, anyways, I wish them all the best in their quest. Crypto is definitely gonna be the next big thing to happen to the world
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Cold. Dead. Fingers.
To say that countries will be revenue ravenous due to COVID is an understatement. I expect the IRS to step up its game...
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This was bound to happen at some point in time. The change in the Office and the growing popularity in crypto prices have made it happen sooner than later. It will be interesting to see the outcome of this (soft) confrontation. One thing is for certain that this political tension will guide the way forward for crypto in the US.
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I wouldn't think this has anything to do with the change in office. In fact, this is coming from the people who are in place and will, for the most part, remain in place after Trump leaves.
The bureaucrats tend to remain the same even though politicians change.
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Could be. I was speculating more on the mindset of the new administration. Would they look at crypto differently?
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Regarding this
I feel this happening is defeating the whole purpose of what cryptocurrency is supposed to be about. I don't know about other countries but I can say that taxpayer money to work in my country. It only enriches government personnel pockets.
I also feel IRS would go for high-profile organizations and not a random crypto trader.
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I am sure the IRS does not care about defeating the purpose of crypto.
They want their taxes, that is all.
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Good for them and bad for crypto.
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The IRS's policies are somewhat contradicting the anonymous outlook of crypto transaction, so they're aiming to put control on something they naturally can't control? It's crazy, do they aim to catch thieves keeping hugs cash in BTC or they're trying to protect? What exactly sre they aiming to protect. Other countries might just keep looking at US and following their footsteps.
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Crypto transactions aren't anonymous. In fact they are extremely transparent. It is true the accounts do not have names to them but by simply getting that info from the exchanges, they can follow the all the transactions made.
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Transparent was what I meant to actually say..
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This...
Is the future with CBDC
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I think that and negative interest rates are what they are planning.
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Taxation is theft. I'll never report my income to the IRS. Especially not cryptocurrencies.
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How is reporting no income to the IRS even possible if you are a resident of the USA? Reporting nothing for years is an obvious red flag.
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How is it possible? I never file.. therefore I'm not reporting zero income. I'm not reporting anything. It ain't none of their business how much money I make or don't make. The last time I filed was 1989.
Taxation is theft.
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I see. Officially, you could be a zero earner living off somebody else's income.
It seems that the IRS does not very effectively cross-check their records against other records.
You are a bad camper.
Be careful, your social credit score might go down.
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In a way, this would be good. Calculating and reporting taxable income is a headache and if that were automated, it would save time and trouble.
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That is true but it gives the government too much power.
What is the politicians decided that they need to fix the budget gap and pass an instant 90% tax rate? There would be nothing anyone could do to stop it since suddenly 90% of all money due to be received is diverted to their accounts.
CBDCs are very dangerous, not because of the central banks but because of governments and politicians.
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That is also true. I don't like the idea of CDBC. That's a financial panopticon and a very unhealthy idea.
My brother in law does my taxes and I have a feeling him and I are going to have a not fun time with this come Spring. The good thing is he holds crypto too, so he is familiar with what is going to need to be provided and all of that. I am hoping there is some kind of threshold and a likely chance that I am below that number since I don't really buy or trade in large sums. If I ever cash out for a large sum they are more than welcome to take their cut. I think it will be a good five years before they start being consistent with any of these requirements.
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and also because of the global economic depreciation this will happen not only in the United States but will be repeated all over the world.
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Price goes up more attention now they care about their share. It's how they work them selves out of the massive debt hole they created.
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And Revenue Canada is not very far behind either.
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Wait a minute, @taskmaster445le... Are you talking about brazilians banks?
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