IRS to force NFT investors to pay millions in taxes

The non-fungible token industry exploded with influencers like Justin Bieber and Melania Trump debuting collectibles and digital art. The IRS is now prepared to crackdown on the $44 billion crypto industry as tax filing season kicks off. 

Investors could pay 34% taxes on profits from digital art

NFT collectors and investors, influencers like Justin Bieber and Melania Trump have fueled a bullish narrative for the $44 billion industry. As tax-filing season begins in the US, the Internal Revenue Service (IRS) could crack down on the NFT industry. 

The IRS has revealed that they are prepared to start collecting taxes on NFTs. 

Jarod Koopman, acting executive director of cyber and forensic services at the IRS, says,

We subsequently will probably see an influx of potential NFT type tax evasion, or other crypto-asset tax evasion cases coming through.

Officials in the US government have decided to scrutinize the NFT industry and tax investors for digital art and collectibles’ profits. Currently, taxation rules on NFTs are unclear; collectors have to calculate the taxes they owe. 

James Creech, a tax attorney, based out of San-Francisco was quoted as saying,

You don’t get to not report gains or losses because the IRS has failed to provide guidance that meets your expectations. The harder it is for people to get to a reasonable -- or ideally, a right -- conclusion, the easier it is to ignore it.

Proponents believe that the IRS would clarify rules on NFT taxation to make filing taxes easier before initiating a crackdown on defaulters.