According to CNBC on January 30, a survey by Credit Karma, a personal finance company has revealed that investors are less likely to report their cryptocurrency gains and losses to the Internal Revenue Service (IRS). Their reluctance has been attributed to their uncertainty that tax deductions will be made.
Bitcoin Investors May be Unwilling to File Tax Returns on Losses
Based on reports, a survey revealed that bitcoin investors in the U.S. are less likely to inform the IRS on their crypto losses. While 53% of investors said they are willing to report both their gains and losses, 35 percent stated that they plan on informing the IRS of their realized losses. Therefore, reputable members of the industry have made comments as to what may have brought about their reluctance.
One of such was made by Selva Ozelli, a CPA and tax lawyer who spoke to CNBC regarding the matter. According to Ozelli, users of Swiss banks did not report to the IRS. Hence, crypto investors may be following the same logic.
People May Have Failed to Report Gains
On the same note, the tax lawyer pointed out that some people may have failed to report their gains to the IRS in the first place. Therefore, they may be skittish to file a report on the losses they have made. Reports also reveal that these gains and losses may not necessarily be detected by the IRS unless the user reports it.
Nevertheless, Tyson Cross, a tax attorney stated that taxpayers have been mandated to report any sales relating to assets. That being the case, it also includes cryptocurrency sales. Cross also said: “Crypto investors probably think it’s easier to file their tax return without the crypto losses.”
The IRS to Crack Down Those Who Fail to File Returns
The IRS, on the other hand, is reportedly unequivocal about filing returns. CNBC outlined that the revenue service has made it clear that those who fail to file returns will be cracked down. Therefore, certain measures have been taken to ensure that people adhere. Some of these are the introduction of a virtual currency team. Chain analysis, a crypto software company has also been hired to track bitcoin transactions.
BTCNN on January 23 informed of John McAfee who claims he is on exile on a boat because he is running away from the IRS. According to McAfee, he has been campaigning that cryptocurrencies will one day stop the government from imposing taxes on people. The 2020 U.S. presidential candidate also revealed that for the past 8 years, he has not paid his tax and neither has he filed returns.