Judgement day could be coming for early crypto investors who thought that the government had no chance in tracing Bitcoin and other blockchain transactions.
According to a Senior Washington Correspondent for CNBC, the “taxman” is coming “for crypto” and the IRS has been authorized to serve a request to review a swath of records across a variety of top crypto exchanges. Here’s everything you need to know about the developing and potentially dangerous situation.
Bought Bitcoin? You Could Owe The Taxman
When Bitcoin began a little more than ten years ago, it was trading at just pennies to the dollar and very few at that time would envision it to be worth $50,000 per coin.
The earliest users traded 10,000 BTC for two pizzas, just to provide an example of the mindset at the time. Even the US government and other nations paid very little attention to the top cryptocurrency, until recently.
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At more than a trillion market cap, Bitcoin is now a force to be reckoned with, and the total crypto market at more than $2 trillion and climbing represents a massive amount of capital growth in under ten years.
Fortunes have been made and lost, then made again, and for all that, the “taxman” wants their cut.
A trillion was added during this time period and the IRS wants a piece | Source: CRYPTOCAP-TOTAL on TradingView.com
An IRS Reckoning Is Coming To Crypto
They say there are only two things in life that are guaranteed: death and taxes. Unless you are lucky enough to reside in a tax haven, taxes are something that cannot be avoided. Try it, and you could face fines, penalties, or imprisonment.
Crypto investors or those that rode the Bitcoin rocket ship into wealth, but haven’t put aside anything for capital gains, or worse yet – haven’t reported anything at all – could be in some serious trouble soon. That’s because according to Senior Washington Correspondent for CNBC Eamon Javers, the “taxman” is coming “for crypto.”
The speculation is the result of a new revelation from the US Department of Justice, that claims that the IRS will serve a John Doe summons to crypto exchange Kraken, “seeking information about U.S. taxpayers who conducted at least $20,000 of transactions in cryptocurrency from 2016 to 2020.”
Related Reading | IRS Crypto Prosecutions Set to ‘Skyrocket’, Says US Tax Law Firm
“There is no excuse for taxpayers continuing to fail to report the income earned and taxes due from virtual currency transactions,” said IRS Commissioner Chuck Rettig. “This John Doe summons is part of our effort to uncover those who are trying to skirt reporting and avoid paying their fair share.”
The document also clears Kraken itself of any wrongdoing. Considering the platform’s location, the company’s hands are tied and will be forced to turn over the requested records.
A similar summons was issued recently to Poloniex, requesting records related to the same subset of users, but from Massachusetts where parent company at the time, Circle, is located. The request related to Kraken is specifically targeting California residents due to its location.
Regardless of location, given how much money has been made in crypto and how little taxes have been paid on it all, the US government could come aggressively looking for their portion. Be prepared.
Featured image from Pixabay, Charts from TradingView.com
