The new IRS tax form targets cryptocurrency holders.

The Internal Revenue Service is starting to turn its attention to cryptocurrencies and tax rules with a new question on the tax form.

The Internal Revenue Service (IRS) is starting to turn its attention to Cryptocurrencies, and tax rules on bitcoin, ether, or other cryptocurrencies are changing. In fact, the IRS plans to change the standard 1040 form by putting this question on the front page: “At any time during 2020, did you sell, receive, send, exchange, or otherwise acquire any financial interest in any virtual currency? The taxpayer must check the box “Yes” or “No.”

 

The crypto question first appeared on the 2019 tax form. 

The cryptocurrency question first appeared on the 2019 tax form, but not all filers had to answer on the part of the return. Ed Zollars, a CPA with Kaplan Financial Education, said that the new placement is unprecedented and will make it easier for the IRS to win cases against taxpayers who check ‘No’ when they should check ‘Yes.’  

By changing the crypto question’s position and having all 1040 filers respond to it, the IRS is making it much harder to claim ignorance of the rules.

 

The IRS is taking cryptocurrencies seriously as a threat to the tax system. 

The change to the crypto question and other recent actions shows the IRS is taking cryptocurrencies seriously as a threat to the tax system, whether noncompliance is by a techy individual or by sophisticated international criminals. The IRS is right to be worried about disobedience, say specialists. Coinbase reported 35 million total accounts as of July. According to the Chainalysis data, there were at least 3.1 million active accounts using the popular bitcoin currency in the U.S. between June 2019 and July 2020. The chief operating officer of ZenLedger crypto tax-prep software firm, Dan Hannuma, thinks a total of fewer than 150,000 crypto owners filed required tax forms for 2017, 2018, and 2019, based on his industry knowledge.

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Jai Pratap
Jai Pratap
A Mass Media Graduate who loves to write. Jai is also a sports enthusiast and a big movie buff. He loves to learn new things.

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