US Crypto Tax Avoiders Beware: The IRS Updates 1040 Tax Form

The Internal Revenue Service (IRS) seems to have found a way to block crypto tax evasion, following an update of its tax form.

IRS: No Excuses for Crypto Traders

According to the Wall Street Journal on Friday (September 25, 2020), the IRS is planning to alter its 1040 tax form. The revised tax form will see cryptocurrency holders give a straight answer about their crypto activities.

The IRS has been relentlessly pursuing crypto investors to disclose transactions, as it suspects that many taxpayers were guilty of tax evasion. However, the tax administrator looks like it has found a way to make all Bitcoin holders accountable.

Presently, the tax form will mandate crypto traders to answer a” yes or no” to the following question:

“At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in any virtual currency?”

What makes the update interesting is the placement of the above question. Prior to the revised tax form, the question appeared in a section where taxpayers were not mandated to fill the answer. However, the question’s position in the altered tax form just below the taxpayer’s name and address leaves no room for excuses or oversight on the part of the crypto trader.

Reacting to the altered form of 1040 was Ed Zollars:

“This placement is unprecedented and will make it easier for the IRS to win cases against taxpayers who check ‘No’ when they should check ‘Yes”

There have been complaints in the past about the lack of a robust regulatory framework for crypto tax filings. In October 2019, the IRS published new tax guidelines that would supposedly make it easier for crypto investors to file taxes. The U.S. tax agency also sent reminder letters to crypto holders. Earlier in September, the IRS announced a payment of $625,000 to anyone who could crack Monero and Bitcoin’s lightning network.

Governments Keen on Crypto Taxation

While the IRS seems to have devised a means to trap crypto holders, more countries are introducing crypto tax laws and clamping down on offenders.

As reported by CryptoPotato in April, Spain’s tax administrator sent out notices to 66,000 crypto investors, as against the 14,000 notices sent in 2019. South Korea, on the other hand, has been unsteady about taxing cryptocurrency.

Earlier in 2020, South Korea’s Ministry of Finance and Strategy revealed that there were no intentions to tax crypto profits. However, reports emerged that the Ministry was considering imposing a 20% tax on profits from crypto trading. In June, the country’s Finance Minister called for the imposition of tax on cryptocurrency trading gains.

Australia’s tax agency, the Australian Taxation Office (ATO), sent out reminders to 350,000 crypto traders in March about their tax obligations. According to the ATO, crypto investors were to keep a comprehensive record of their trading activities for ease of tax payment.

This article was first published on: Sep 26, 2020