US Tax body Internal Revenue Services (IRS) is demanding that American Citizens who hold cryptocurrency deposits in their wallets be taxed. The tax agency sent warning letters to more than 10,000 cryptocurrency holders over failure to pay appropriate taxes or falsifying taxable income.
The Internal Revenue Services (IRS), the government agency in charge of tax collection in the United States, wants cryptocurrency holders to pay taxes. IRS recently sent more than 10,000 emails to cryptocurrency users urging them to clear their tax balances. The letter also warned users who deliberately inaccurately reported possible taxable income from cryptocurrencies.
On Friday, the agency said taxpayers must take it’s letter very seriously and review their tax filings with the IRS. It further urged users to pay taxes they earlier skipped to pay with full interest and penalties. The Agency’s Commissioner Chuck Retting revealed that the IRS is expanding its efforts on tax collection to include digital currency by using sophisticated data analytics.
IRS started emailing cryptocurrency users within the United States last week and said it would end the notification in August. The agency said it obtained the list of cryptocurrency holders through its various tax compliance endeavors which follows the laws of the United states of America. The agency said by law, any body skipping to pay taxes is liable to a criminal prosecution and it wouldn’t hesitate to penalised crypto users over tax evasion.
Through the various regulatory guidelines put across by the IRS and SEC, cryptocurrency has become less and less anonymous. Currently cryptocurrency exchanges share information with regulators not only in the United States but in most countries across the world. Government wants cryptocurrency exchanges to abide by the KYC and the AML policies put across.
Recently coinbase informed its clients that it would provide account information of users whose balances exceed $20,000 to the IRS. The platform justified its act as a compliance with a court order demanding to give account details from 2013 to 2015 for every user whoes balances exceed $20,000.
Although the US government still treats cryptocurrency as a non legal tender, the IRS treats cryptocurrency as a property. The revenue agency said cryptocurrency is under the same categories as real estate, cars and sale agreements which are all liable to be taxed.