The Internal Revenue Service (IRS), the tax watchdog of USA, has released an article today making some declarations to crypto traders about taxes when using and trading cryptocurrencies. In the released article, it also specifies that the virtual currencies are treated as properties in the USA, and the operations made with them are also taxable by law.
Also, it reminds taxpayers that a form has been prepared to help people who need to declare their cryptocurrency sales with the IRS. This exhortation seems on point because the majority of users that trade in cryptocurrencies do not pay taxes, according to latest reports. Only 0,4 % of the users that do trade with crypto are actively declaring and paying taxes for these operations. So, there is a great chunk of this revenue that gets eroded by non-paying traders.
The problem is that with crypto coins, there is a great deal of anonymity for the users. And operations are difficult to pinpoint unless the user is registered with a great wallet or exchange that enforces KYC policies on customers. But it seems like this is going to change, and that this could be effectively the year of the crypto adoption, and adoption brings regulation and taxes.
The article also details the sanctions that evading taxpayers could face. It affirms that:
Taxpayers who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and, when appropriate, can be liable for penalties and interest.
In more extreme situations, taxpayers could be subject to criminal prosecution for failing to properly report the income tax consequences of virtual currency transactions.
The IRS has also pursued big exchanges via judicial action. The faceoff that they had with Coinbase ended positively for them, getting the info of more than 1300 top traders of that platform. We will see if this call from the IRS is heard, or if crypto traders choose to keep their earnings for themselves, as has happened majorly till now.