IRS warns crypto tax defaulters via stern warning letters

IRS warns crypto tax defaulters in stern warning letters

Crypto tax defaulters beware. The U.S. tax agency, Internal Revenue Service (IRS) wants to tax cryptocurrency holders. As per reports, the IRS has proposed that digital wallet owners with crypto deposits in their wallets be taxed appropriately. Interestingly, the agency has also dispatched warning letters to around ten thousand cryptocurrency owners over tax obligations about crypto deposits or false tax information.

Lately, the United States has been getting tough on crypto tax defaulters both at home and abroad. Now, the IRS wants to tax cryptocurrency holders and wants the digital currency owners to take the proposal seriously. Tax defaulters were warned that tax payments or penalties must be strictly adhered to. Chuck Retting, the current IRS commissioner, said that the agency is working to bring cryptocurrencies under the tax net, and advanced data analytics are being deployed to track tax theft.

Crypto tax defaulters can face criminal prosecution

The cryptocurrency owners in the United States were issued warning letters last week and the notification period would end in August 2020. IRS further stated that it has a detailed record of cryptocurrency owners in the United States. In a stern warning, it mentioned that crypto tax defaulters will be subject to criminal prosecution if they do not pay their tax liabilities before the due date. The agency won’t hesitate to penalize the crypto tax defaulters.

The increasing regulations and strict tax laws have taken away the anonymity associated with the cryptocurrencies. Both the IRS and the Securities and Exchange Commission have collaborated to create sophisticated systems that track down crypto tax defaulters. From crypto exchanges to wallet services providers, the information is shared with the agencies. This phenomenon is not limited to the U.S. alone, and most countries are doing the same under the garb of ‘Know-Your-Customer’ guidelines.

Recently, crypto exchange Coinbase stated that account information of users with a balance of more than $20,000 would be shared with the authorities. Cryptocurrency is yet to become a legal tender in most countries. However, in the U.S., it is defined as property and taxed under the same category.

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Gurpreet Thind

Gurpreet Thind

Gurpreet Thind is pursuing Masters in Electrical Engineering at University of Ottawa. His scholarly interests include IT, computer languages and cryptocurrencies. With a special interest in blockchain powered architectures, he seeks to explore the societal impact of digital currencies as finance of the future. He is passionate about learning new languages, cultures and social media.

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