Kelly Bullis: IRS going after crypto tax cheats

Kelly Bullis

Back in January, I wrote concerning the Tax Rules of Virtual Currency. Well now there was a brand new blurb within the information about what IRS is now doing to catch of us who assume they will disguise their earnings from crypto transactions.
The IRS is demanding cryptocurrency exchanges launch person info by way of “John Doe” summons. Once the IRS has issued such a summons, the exchanges are required by legislation to launch requested person information to the IRS, who makes use of it to match in opposition to tax returns filed to see if anyone didn’t report a sale.
Recently, the IRS issued such a summons to crypto exchanges Kraken and Poloniex for info from 2016-2020 on accounts with at the very least $20,000 in transaction worth in any of these years. Next, the IRS will ship out notices to of us who’ve come below investigation for not reporting their crypto transactions in these exchanges.
The IRS despatched out related notices after analyzing the info they obtained from a “John Doe” summons completed to the Coinbase alternate final yr.
I don’t know in the event that they already did a “John Doe” summons to Bitcoin but. Clearly, that’s the “holy grail” for the IRS since that’s the largest variety of crypto customers on the market by far. They could have already issued such a Bitcoin summons, after which once more, they might not.
Remember that on the 2020 tax returns, the IRS is asking you to volunteer in case you are concerned in cryptocurrency? If they wait till you reply “no” below penalties of perjury, then discover out you didn’t reply in truth once they undergo their “John Doe” summons, you should have dedicated perjury, which is a felony offense, not a civil one. (Do you hear jail sentence?)
What must you be involved about? If you correctly reported all crypto transactions every year, and answered the query about cryptocurrency in your 2020 return appropriately, then …NOTHING!
If you forgot (on objective or by chance) to report all of your crypto transactions, it’s strongly prompt that you just file amended returns earlier than the IRS sends you a kind of “notices.” Even worse, in case you didn’t reply the 2020 tax return query in truth, that’s another excuse so that you can amend your 2020 return and proper that ASAP, earlier than the IRS catches on and sends you a discover.
Did you hear? Prov 30:6 says, “Don’t you add to his phrases, lest he reprove you, and also you be discovered a liar.”
Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 882-4459. On the online at BullisAndCo.com. Also on Facebook.

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