Guest post by Dmitri Alexeev from BPM LLP. Dmitri Alexeev is a Tax Partner at BPM LLP. Delinquent federal and state tax filings or unreported 2017 or prior tax years' transactions may force taxpayers dealing in crypto to liquidate significant positions in cryptocurrencies at lower values to pay outstanding tax liabilities to the IRS, including interest and penalties.
At the tax symposium held in November 2017 by the State Bar of Texas Tax Section, Daniel Price of the IRS's Office of Chief Counsel dismissed the stories that the IRS intended to establish a separate, voluntary disclosure program for unreported income related to offshore virtual currencies.
Taxpayers who have unreported income from convertible virtual currency transactions face a multitude of civil-and possible criminal-penalties and charges of tax evasion and other crimes.
Anyone convicted of tax evasion is generally subject to a prison term of up to five years and a fine of up to $250,000.
In March 2018, ahead of the 2018 tax filing deadlines, the IRS issued Information Release 2018-71 reminding taxpayers that income from virtual currency transactions is reportable on their income tax returns.
In October 2018, the Information Reporting Program Advisory Committee issued a public report that provided a number of specific recommendations and also expressed concerns over various tax reporting and compliance issues.
The IRPAC, a collaborative forum between the IRS and tax professionals, also expressed interest in helping develop information reporting and withholding guidance for virtual currency transactions.
The IRS is also under significant pressure to implement the Tax Cuts and Jobs Act which was signed by the President and became law on December 22, 2017.
Tax professionals and various organizations like the American Institute of Certified Public Accountants and the American Bar Association are involved in seeking clarification to many cryptocurrency tax issues.
Unlike a few years ago, the number of CPAs and tax attorneys who specialize in virtual currency transactions and digital assets, tax and accounting issues are growing.
Understanding the IRS and Cryptocurrency: Penalties, Tax Evasion, and Compliance
gepubliceerd op Jan 25, 2019
by Cryptoslate | gepubliceerd op Coinage
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