Let the fun begin for those of us in the United States. According to a notice by the Internal Revenue Service (IRS) more than 10,000 people will be receiving letters to educate them on their tax liability on cryptocurrency transactions.
Here is a quote from the notice:
"Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties," said IRS Commissioner Chuck Rettig. "The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations."There are three variations: Letter 6173, Letter 6174 or Letter 6174-A, all three versions strive to help taxpayers understand their tax and filing obligations and how to correct past errors.
The letters will begin going out toward the end of August. Let me know in comments if you end up getting one of these letters.
The infernal Revolting Syndicate is built on two principals. Extortion and Terror.
If this group really meant that people should file their taxes appropriately, then they would have defined cryptocurrencies by now. Is it a money or is it a commodity? They want it to be both and neither as it suits them.
i hope that soon we will come to the conclusion that they are an illegal and unconstitutional institution and stop sending money to them.
Because truly, this group takes all that money and throws it into a furnace.
Yes, but there is one thing that the IRS have not yet done (and judging from the hard on that Mnuchin has for killing off crypto, this is only a matter of time)...
US taxpayers are expected to file an FBAR report with the FINCEN department (overseen by the IRS) if you have assets in excess of $10K overseas at any time. That could be bank accounts, insurance, superannuation, real estate, etc. There are further regulations if that exceeds $50K, but for now just consider the FBAR.
There is no reason why they wouldn't classify crypto as an asset, and since it is not domiciled in the USA (the Internet is not the USA), then it may be that anyone that holds crypto may be required to report with their tax returns the total value of crypto asset holdings if it exceeds the $10K threshold at any time in one year. To my knowledge, this has not yet been enforced but it seems to be a natural path forward for the IRS to require all assets outside of the USA to be disclosed. Failure to do so has HUGE penalties (like $10K per year, with no real statue of limitations exclusions). So that is year on year on year, going back until they see you originated the transaction.
Keep an eye out for this one, because it could catch a lot of crypto holders off guard.
The reality here is that this govt agency is running with very restricted and limited budget and is using technology to try and find unpaid taxes rather than humans. The days of human audits are long gone. Now it is about automating tax collection, and if you though that crypto was some way to stick it to the man, wrong. You have walked into the automated jail of the IRS. Yes, you will be identified - only because your blockchain transactions and their fingerprints can be logged and identified using their AI, just like facial recognition, Geolocation, etc.
If you think this is bad, try and be a US citizen and have overseas assets and not report them on FBAR or FATCA forms. The penalties are so severe that it makes the fines from human audits look amateur. When you have big computers and minimum labor, you can make up your budget shortfall with $10K+ fines (year on year), plus interest plus penalties, etc. It doesn't take long before the money you've collected in penalties makes the actual taxes that law abiding citizens paying look like chicken feed.
So know your adversary. If you didn't get a letter, that's great. You were not yet identified in the first wave. But the IRS can scan a blockchain just like anyone else can and they have more people & machines than you can imagine. This is what happens when organizations want to do more with less - they favor AI over humans. The IRS is no different.
Pay your taxes and keep good records. It is far cheaper that way.
Truth
Pretty sure this is just continuing fear tactics to make people pay a shit ton of taxes due to the way they currently view crypto.
I wonder if those that have filed accordingly would get them as well. Given the uncertainty on a number of type of transactions, there will certainly be gaps to resolve for sure!
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US IRS is really a powerful entity right. Hope regulators and law makers ironed out those definition of crypto assets.
They should do it fast.
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