• 12 hours Silver Stocks Have Been Decimated In The Coronavirus Sell-Off
  • 1 day How Blockchain Tech Could Make Mergers And Acquisitions More Efficient
  • 2 days America’s Shortage Of This Metal Keeps Trump Up At Night
  • 2 days Bidet Bonanza: Defying The Toilet Paper Shortage
  • 3 days U.S. Auto Sales Fall By 75%
  • 3 days Violating Quarantine? Big Brother Is Watching
  • 4 days Does Gold Still Have Some Room To Run?
  • 4 days Major Acquisition Gives The World’s First Green Ride-Share Another Edge
  • 4 days U.S. Pushes For Digital Currency For Immediate Stimulus
  • 5 days The Impossible Challenges Created By Growing Population
  • 5 days Gold Skyrockets After Fed Pledges "Unlimited" Cash To Boost Economy
  • 5 days World’s Richest Lose $1 Trillion In Stock Market Rout
  • 6 days Gas Stations Shut Down In Venezuela As Coronavirus Crisis Intensifies
  • 6 days The Best And Worse Case Scenario For The U.S. Stock Market
  • 6 days 3 Industries Soaring During The Coronavirus Crisis
  • 7 days The Key To Commercial Hydrogen
  • 7 days Gold Still Beating Much Of The Market Despite Sell-Off
  • 8 days Gold Miners Struggle With COVID-19 Fallout
  • 8 days The Dollar Reigns Supreme In Times Of Crisis
  • 9 days The Most Exciting Green Startups To Watch In 2020
China's Boldest Move Yet To Ditch The U.S. Dollar

China's Boldest Move Yet To Ditch The U.S. Dollar

It appears that China's blockade…

Iran Looks To Launch Its Own Cryptocurrency

Iran Looks To Launch Its Own Cryptocurrency

Iran has proposed the creation…

U.S. Pushes For Digital Currency For Immediate Stimulus

U.S. Pushes For Digital Currency For Immediate Stimulus

The world’s governments are rushing…

  1. Home
  2. Cryptocurrencies
  3. Other

The Cryptocurrency Tax Battle Has Officially Begun

Tax

Cryptocurrency traders thought they could make a fortune and evade taxes, but the IRS is now patrolling the ether, and a Coinbase data dump of high-end users is imminent next month.

On Friday, Coinbase announced that it would give the IRS the names, addresses and transaction data of more than 13,000 users who did more than $20,000 in Bitcoin business between 2013 and 2015.

And it will all happen within the next 22 days.

Coinbase didn’t go down without a bit of a fight, though. It was ordered to hand over users in late 2016, and then fought it in court. They lost, for the most part, but the IRS succeeded only in demanding the data from highest-transaction users.

Symbolically, it’s a major blow for the entire sub-culture of crypto traders who were hoping to operate indefinitely without government scrutiny. But only symbolically at this point.

Those 13,000 users of Coinbase represent only a tiny fraction of its overall users, so many will be asking if the IRS really won this battle. Related: Global Cobalt Supply Is In Jeopardy

As of December 2017, Coinbase had over 13 million users. That’s more than major online brokerage firm Charles Schwab has.

(Click to enlarge)

In one week alone in November, Coinbase added 300,000 new users.

If the IRS is getting the user data from only 13,000, it’s not putting a dent in taxable crypto profits.

But it’s not just about evading taxes for some crypto traders.

Confusion rules this roost, and the IRS isn’t helping. Tax returns are cryptic enough without adding digital currencies, and there aren’t any new guidelines to follow.

IRS ‘guidance’ issued in March 2014 was vague at best, and there hasn’t been anything new since.

Compliance is tricky when there aren’t any clear rules, and the Coinbase defeat that targets only high-transaction users doesn’t mean the tax man won’t come after others.

Further complicating matters is the fact that crypto exchanges are not broker-regulated by the IRS. That means no 1099 forms and no one calculating gains for you. 

The IRS is playing catch-up here, and it’s still got a long way to go in detecting who’s making money in the ether.

Cryptocurrency media report that early data from an online tax service shows that only 0.04 percent of U.S. taxpayers have filed any crypto gains or losses. It’s pretty sparse when you consider that an estimated 7 percent of Americans own cryptocurrency and probably owe taxes on these investments.

In a January survey conducted by Credit Karma, 57 percent of a pool of 2,000 American cryptocurrency owners said they had crypto profits, while 59 percent of those said they never reported those gains to the IRS.

Whether it’s a matter of tax confusion or purposeful evasion, the situation is not likely to change in favor of the IRS in time for taxes this year. If only a tiny fraction of Coinbase users are being outed, most know they’re still safe from scrutiny. But shelter from Uncle Sam is elusive: Once the IRS figures out how to really net crypto gainers, the retroactive penalties will be stiff.

By Fred Dunkley for Safehaven.com 

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment