A Trillion Dollars in Tax Evasion

         The Internal Revenue Service (IRS) recently estimated that there is a $1 trillion “tax gap”. That would be the difference between what it collects, and what people and businesses owe. They feel a big reason for this discrepancy is the explosion of cryptocurrency.

Cryptocurrencies by their very nature are designed to be elusive and invisible to the outside world. IRS Criminal Investigations has made great strides into exposing how crime organizations use digital currencies on the dark web and significant arrests have been made. However, more Taxpayers are using these currencies and not accurately reporting them.

The IRS taxes Cryptocurrencies as property. So anyone who uses them must pay taxes if they are sold for profit or used to purchase anything. One recent example would be a nonfungible token (NFT). A NFT is a collectible that is bought or sold in the cryptocurrency world and it has quickly become a billion dollar market. Some examples might be a digital card or artwork. These NFT’s and cryptocurrencies are all subject to capital gains taxes. Some Taxpayers may be unaware, while others are actively evading them. Some digital currency platforms are now cooperating with the IRS as it makes the truthful reporting of cryptocurrency a priority.

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