IRS has waged a war on alternative currencies for many years now, and its heating up again. This war will affect many, but it remains to be seen, how
IRS has waged a war on alternative currencies for many years now, and its heating up again. This war will affect many, but it remains to be seen, how seriously will it affect the people who have invested in alternative currencies like Bitcoins. Okay, let’s start from the first. Recently, Coinbase Inc has been ordered by a federal district court to declare their customer account information to the government. Now, many people who have invested in alternative currency like in Bitcoins and other digital currencies are afraid that the IRS will get their account information. Now, having this information, the IRS can also mount up a criminal investigation against certain people. But, is this time to panic? We don’t think so.
Coinbase has said in the past that it is very much committed to protect its user’s data, and will not give in to any type of Government orders, which means that they will go to the higher courts to challenge the order given by the District court. This may mean more delay in the order. But, even if the IRS wins in the higher court, and Coinbase has to turn over their user accounts to the Government, the Government cannot start auditing them immediately. It will take time for the government to arrange so much of the information. And, honestly, simply transacting in bitcoin doesn’t mean that people are evading tax, even if the transaction is huge. Therefore, when it comes to alternative currency, the government has many point of views to judge and it will take a long time.
Considering all the things that may or may not go your way, you should be concerned. Since, the IRS validates taxes coming from all sources, and even takes in consideration the gains and losses of property, you should report all of your digital transaction in your next tax filing, given that, you do not want to be accused of tax evasion. It is a good time to clean up your past records, and file them in your next tax file.
The IRS has been working tirelessly to get to tax cheaters who have deposited money in foreign bank accounts and haven’t reported that. They have tirelessly pursued every American with a offshore bank account. The Government may have taken time to get to these tax cheaters, but they have got what they actually wanted each and every time. IRS has been wildly successful in the offshore accounts deal, and as a result, the collections are $10 billion dollars. Likely so, this time, the IRS is aiming to digital alternative currency for a similar heist.
The Records of the case of IRS dealing with the Offshore accounts are telling, if not frightening. The records say that, those who came forward with their offshore bank accounts in the early stages were faced with no criminal charges, and their penalty was much lower. People who waited a bit, for things to cool down, they faced heavy penalty charges and sometimes faced criminal charges from the Department of Treasury.
The users of digital currency should pay heed to these lessons from the Offshore accounts deal. You should not wait for the IRS to find out about your alternative currency transactions. Better, pay your outstanding taxes and file them in your next tax filing. Or, if you are afraid f things may be blown out of proportion, consult your lawyer.
Though there is time before the IRS hacks on to the alternative currency users, but this is a good time for the users to prepare for the upcoming storm.