IRS to hunt down anyone failing to report its own cryptocurrency taxes
|- The US court announced the decision on the first Bitcoin case related to tax fraud.
- The tax authority requires citizens to report on the crypto gifts they receive.
Bitcoin holders should be extra careful when filing their tax returns with IRS as the agency may throw them behind the bars if suspecting a tax aversion behavior.
A former Microsoft employee, Volodymyr Kvashuk, will spend nine years in prison for robbing Microsoft for $10 million, using a Bitcoin mixer to hide his proceeds from the tax authority. While the case is mostly centered around the theft, the experts note that this is the first US-based Bitcoin case that involves tax evasion.
Another case of trace hiding using Bitcoin
Kvashuk worked at Microsoft from August 2016 to June 2018. During that time, he stole lots of digital gift cards using his access to Microsoft's online retail sales platform. To conceal the digital trace of the crime, Kvashuk transferred the proceeds from the card sales to Bitcoin and used a mixer to hide this action from the authorities.
The investigators found out that he transferred approximately $2.8 million Bitcoins to his bank accounts and filed false tax returns and claimed that the money received was a gift from a relative.
Together with nine years in prison, Kvashuk will also have to pay $8,344,586 in restitution.
IRS takes steps to prevent crypto-related tax evasion
The US tax authority requires the citizens to answer a question referring to their cryptocurrency transactions. The new tax form contains the following question right on the front page:
At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?
According to the IRS explanation, the answer should be "yes" if the digital assets were received as a gift. Before the 2019 tax year, the gift shouldn't be disclosed.
FXStreet reported earlier that Bitcoin holders won't have to disclose their holdings to IRS, only if they held digital assets or transferred them between their own wallets. In all other cases, the authorities want to know who has been engaged in trading cryptocurrency or sending and receiving it from other people.
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