One of the things that people love about cryptocurrencies like Bitcoin is the fact that the owners can remain anonymous. This has allowed many people around the world to avoid paying income taxes on the profits they have made by owning crypto. As you might imagine, the IRS is doing everything they can to prevent this sort of thing from happening in the United States. In a report by theblockcrypto.com, they have been able to track down the owners of Bitcoin and other types of crypto because they have the legal authority to get the names of people who have accounts at Coinbase. This is one of the largest crypto exchanges in the United States. People need to have their identity verified prior to opening an account.
The IRS has been sending letters to the account holders of Coinbase that tell them to make sure their income tax returns have the correct info concerning the money they have earned as a result of crypto ownership. There is no question that the IRS is taking this very seriously. Of course, there is nothing stopping the people who have Coinbase accounts from simply buying Bitcoins overseas where they can remain anonymous and keep their earnings a secret. Other countries have not cracked down on the owners of virtual currencies as much as the United States has done over the past year.
According to the IRS, there are 10,000 people at this point who will be receiving a letter from them regarding their crypto holdings. The issue of tax evasion is one of the main reasons why countries like India are seriously thinking about banning crypto permanently. Politicians in the United States have not floated the idea of banning it as of yet. However, there are many people on Capitol Hill who are skeptical about it. President Donald Trump said in a tweet that he does not like crypto. This was the first time that he had given an opinion about it one way or the other.
Virtual currencies are property for tax purposes according to the IRS. Therefore, all of the profits that are generated from the ownership of crypto need to be reported to the IRS. The agency will be monitoring all of the activity at Coinbase to make sure none of the people who have accounts are trying to fudge their income tax returns. It is unclear if the IRS has account holder info about the other U.S. crypto exchanges.
