Will the IRS Collect on Cryptocurrency?

cryptocurrency

Will the IRS Collect on Cryptocurrency?

The digital age has changed the way the world operates. Just about every industry imaginable has been affected by technology already. That includes how we use and exchange money, over the Internet. Whether you call it bitcoin or cryptocurrency, or any other similar moniker, these forms of digital currency have become increasingly popular. They have also become a great way to avoid tax payments, and the IRS wants its cut. All of it.

What is Cryptocurrency?

So what is a cryptocurrency? According to the definition from Investopedia, “A cryptocurrency is a digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of this security feature. A defining feature of a cryptocurrency, and arguably its most endearing allure, is its organic nature. It is not issued by any central authority, rendering it theoretically immune to government interference or manipulation.”

Well-Suited for Tax Evasion

This is the exact reason that cryptocurrency has become so popular. In fact according to Investopedia, “The anonymous nature of cryptocurrency transactions makes them well-suited for a host of nefarious activities, such as money laundering and tax evasion.” Don’t think the IRS hasn’t taken notice. According to the agency, it appears taxpayers are simply ignoring these payments, despite the fact the agency says they are not optional. So how bad is the problem. The IRS says that in 2016, out of the more than 130 million electronically filed returns in the U.S., only 802 taxpayers reported cryptocurrency income.

Asking the Courts for Help

Obviously, the IRS is not happy with those numbers and they want more compliance. However, due to the nature of cryptocurrency, as previously mentioned, it is difficult for the IRS to track. Furthermore, there is no requirement currently in place that forces cryptocurrency exchanges to report their transactions to the IRS. Thus, the IRS has begun to take other measures, including turning to the courts for help. For example, just last November, the Department of Justice filed a lawsuit against Coinbase asking the court to force the company to “turn over its records on all U.S. customers that transferred convertible virtual currency between December 2013 and December 2015.”

The Battle Continues

The initial response from the court was in favor of the Department of Justice. However, Coinbase, as well as it customers, is fighting back and for now the court’s ruling has been delayed. Furthermore, even if the IRS does gain access to these customers’ names, the fight will still be far from over. That’s because taxing the crypto gains will be very difficult, given that much of the trading happens on overseas exchanges. Additionally, with the IRS becoming more active in its efforts to track and tax these crypto gains, it’s more likely that many more of these transactions will move from the U.S. to overseas exchanges, as well.

 

We hope you found this article about “Will the IRS Collect on Cryptocurrency?” helpful.  If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page  or our website at www.GROCO.com.  Unfortunately, we no longer give advice to other tax professionals gratis.

To receive our free newsletter, contact us here.

Subscribe to our YouTube Channel for more updates.

Alan Olsen, CPA

Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com.  GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.

Alan L. Olsen, CPA, Wikipedia Bio

 

 

GROCO.com is a proud sponsor of The American Dreams Show.

 

American-Dreams-Show-Accounting-firm-in-ca-cpa-tax-advisors-groco-alan-olsen

The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.

Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.

The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.

They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..

American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:

Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…

Untitled_Artwork copy 4

MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness.  It’s mission statement:

In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.

Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.

Posted in

Preserving My Family’s Life’s Work & Legacy

Tom Chatham, Chairman of Chatham Created Gems & Diamonds, Inc., discusses preserving his family’s legacy and life’s work on Alan Olsen‘s American Dreams Show.   Transcript: Alan Olsen Welcome to America dreams. My guest today is Tom Chatham. Welcome to today’s show.   Tom Chatham Thank you glad to be here.   Alan Olsen So, Tom, we’ve had…

Mastering Business Growth with Howard Shore

Mastering Business Growth with Howard Shore

Howard Shore, Founder and CEO of Activate Group Inc. discusses managing, even mastering, business growth and the challenges growing quickly can present on Alan Olsen‘s American Dreams Show. Transcript: Alan Olsen Welcome to American Dreams. My guest today is Howard Shore. Howard, welcome to today’s show.   Howard Shore Alan, thank you for having me.   Alan…

Prosperity and Self-Reliance Zealot Steve Alder

Prosperity and Self-Reliance Zealot Steve Alder

From North America to Ghana, Africa, Steve Alder, President of Ensign Global College (www.ensign.edu.gh), sits down to discuss how a professor helps to build global prosperity and self-reliance on Alan Olsen‘s American Dreams Show. Transcript: Alan Olsen Welcome to American Dreams I’m visiting here today with Steve Alder. Steve, welcome to today’s program.   Steve Alder Thank…

Steve Young on Building an Epic Family Legacy

Retired 49r Steve Young Discusses Building a Family Legacy at the Legacy Builders Event on May 15, 2024 As GROCO celebrates three decades of excellence in family office tax and advisory services, we have developed the Legacy Builders to stands as a testament to the firm’s enduring vision: to transform wealth into a powerful tool…