The Internal Revenue Service (IRS) of the US has long been trying to figure out the best way to single out and tax cryptocurrency holders. The authority has issued a new draft form which aims to obtain essential information regarding the acquisition, exchange, and sale of Bitcoin and other virtual assets.
Cryptocurrency taxation has long been one of the hot topics amid regulators throughout the entire world. When it comes to the US, in particular, when an investor profits from the increase of Bitcoin’s price, he has realized a capital gain, and he bears a tax liability that has to be reported.
On the other hand, if the price goes down after the purchase, the investor would realize a capital loss that will save him money on the tax bill. However, it still needs to be reported.
The IRS, though, has recently introduced a new form that, despite still being just a draft, could raise more questions as to how cryptocurrencies were acquired, exchanged, and sold.
The form asks directly:
“At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
It’s unclear whether it will be put into exploitation, but it goes to show that the efforts of the revenue service towards obtaining more information regarding cryptocurrency ownership and usage are increasing.
The new draft form could have been somewhat expected. According to the new Criminal Investigation Annual Report 2019, cryptocurrencies pose a serious risk for the financial and tax system. This is expressed by Deputy Jim Lee.
“Cryptocurrencies are undermining the financial & tax system. Companies pay employees in crypto/receive crypto for goods/services. They don’t pay taxes & entities shift income to offshore exchanges with no reporting.”
Moreover, Chief Don Fort has stated that the Criminal Investigation (CI) department has a lot of open cases that are related to cryptocurrency crimes. Supposedly, the information on these should be made public fairly soon.