Crypto Investors Beware: IRS Recruiting Tax Cheats

The WSJ’s “IRS Comes For Crypto Investors Who Haven’t Paid Taxes,” may be another reason for common folks not to like the rich or wanna-be tax dodgers.

As the newspaper notes, already “on the hunt for tax cheats, Uncle Sam is winning court battles to force crypto currency exchanges to reveal their customers. [So] your big unreported profits on bitcoin, ether or dogecoin could translated into big problems with the IRS.” As this year’s filing deadline approaches, it suggested, “it’s a good time to clean up your act…especially if you have traded a lot or have more than a small stake.”

Tax attorneys quoted say the “IRS is mounting a full-court press” on the issue and cite two new IRS efforts to find crypto tax cheats as examples: “In April, a federal judge in Boston approved an IRS summons to payments company known as Circle (& its affiliates) to turn over customer records…And, in early May, a federal judge in SF approved another IRS summons for records to the crypto exchange known as Kraken.” Apparently, the IRS has been encouraged by similar efforts going back to 2016, in which such agency efforts triggered 1K amended tax returns and collected $13M from penitent crypto holders. “The IRS is serious about this,” warned one attorney. Last fall, in fact, the agency moved a crypto holdings Q to near the top of the 2020 tax return, thereby raising the stakes for cheaters.

Davd Soul