Uncle Sam Wants You to Pay Your Crypto Taxes
By Alexander Kugelman | August 8, 2019
Cryptocurrency tax attorney Alexander Kugelman joined the Crypto Craze TV show to discuss how the IRS is cracking down on cryptocurrency investors and traders who may not be paying their crypto-related taxes.
The IRS sent 10,000 letters to suspected cryptocurrency traders who did not meet their tax requirements related to crypto investments, according to Cheddar.com.
“This signifies a wider enforcement on the civil level (by the IRS),” Kugelman said. “Any sale of fiat or trade crypto-to-crypto is going to be considered a taxable event as a default and has to be tracked just like a stock trade.”
If your case goes to a cryptocurrency audit and there is lack of reporting of past income, there could be a negligence penalty of 20% additional tax up to the fraud penalty of 75% additional tax so it really is lot better to come forward and amend now then have the issue arise at audit, Kugelman said.
Another complexity in the world of crypto is many countries outside of the U.S. don’t consider it taxable income.
“Many people who are U.S. taxpayers but from other countries are often shocked to find out they have a huge compliance issue they must address with the U.S.,” he said.
The IRS considers cryptocurrency an existential threat to tax compliance and has prioritized audits of cryptocurrency income. However, the IRS’s capacity and understanding of cryptocurrency is limited.
The team at Kugelman Law is an industry leader in accounting, reporting, and audit representation for cryptocurrency matters. Contact us today to discuss the best strategies for your cryptocurrency case.
Watch the full Crypto Craze interview with Alexander Kugelman here.