The United States government takes tax evasion very seriously. Two separate agencies, the Internal Revenue Service (IRS) and the Department of Justice’s (DOJ) Tax Division work to hold those who attempt to avoid their tax obligations accountable.
These agencies recognize that the financial market is evolving. They realize investors are looking to cryptocurrency to diversify their portfolios.
In recent years, cryptocurrency has rebounded from a slump and is starting to climb. As a result, those who have invested in this market are starting to see their investment pay off … and the government has taken notice.
Cryptocurrency soars, government takes notice
The IRS and the DOJ have noticed that not every cryptocurrency owner is reporting the asset on their tax returns. As a result, some taxpayers may not be meeting their tax obligations for these assets. Agencies are ramping up their efforts to prosecute those who evade tax obligations through the use of cryptocurrency.
Prosecution more likely to move forward, taxpayers should consider reporting
In the past, these agencies had a difficult time getting their tax evasion charges against taxpayers using cryptocurrency to move forward. Juries would find it difficult to convict because they were unfamiliar with bitcoins and other forms of digital currency. This is no longer the case. The public is more aware of this form of currency. This could result in the prosecution finding success moving their case forward.
Because these cases are more likely to proceed, taxpayers should consider coming into compliance with tax obligations. Those who sell, convert or use bitcoins or other forms of digital currency to purchase goods are likely required to report the asset. If uncertain, it is wise to seek legal counsel. The attorneys with Goldburd McCone LLP can review your situation and provide guidance on the best way to ensure compliance.