The US Attorney General’s Cyber Digital Task Force recently issued a comprehensive report outlining the United States’ frame for authorities against cryptocurrency-related crimes. This report explains emerging threats, authorities’ challenges, as well as studies. According to the task force file, tax evasion is one of those 3 major ways bad actors use cryptocurrency. This report adds to additional reports issued in 2020 by regulators such as GAO, TIGTA, OECD where crypto taxes are the most important theme.
What Is Tax Evasion?
Evasion of evaluation is the more common of the two and happens when someone willfully attempts to omit income from taxes, substantially underreports income, or overstates deductions. The Cyber Digital Task Force report points out: “not reporting capital gains from the sale or other disposition of the cryptocurrency, not reporting business income obtained in cryptocurrency, maybe not reporting wages paid in cryptocurrency, or utilizing cryptocurrency to ease false invoice schemes made to fraudulently reduce business income are examples of evasion of assessments”
The report further states that these are frequently seen evasion of assessment scenarios from the cryptocurrency world. Evasion of payment occurs after the tax assessment is made and the taxpayer conceals funds or other resources that could be used to pay back the tax obligation.
John McAfee indictment
The recent indictment of John McAfee exemplifies both of these scenarios. According to the Department of Justice (DOJ), McAfee “earned countless income from promoting cryptocurrencies, consulting job, speaking engagements, and selling the rights to his entire life story for a documentary. By 2014 to 2018, McAfee supposedly failed to file tax returns, despite getting considerable income from these types of sources” (evasion of evaluation ). Further, “McAfee attempted to evade the IRS by hiding assets, such as real property, a car, and a yacht, in the names of other people” (evasion of payment).
Also read: An Accelerated Future For Tax Leaders
Tax evasion is a serious offense. Upon conviction, wrongdoers could be fined as much as $100,000 ($500,000 for corporations) or imprisoned up to five decades plus the price of prosecution.
More Focus On Crypto Taxes Than Ever Before
Local and global regulators have paid a tremendous amount of attention to the cryptocurrency planet in 2020, especially with an emphasis on taxes. This is a remarkable difference in contrast to previous years where regulators primarily focused on safety fraud issues linked to Primarily Coin Offerings (ICOs). At the start of the calendar year, the Government Accountability Office (GAO) issued a report indicating the IRS improve cryptocurrency tax enforcement efforts. This was reinforced again from the TIGTA report issued in October. And only this week, the OECD recommended tax authorities throughout the world to make a uniform successful tax policy for cryptocurrencies. Governments everywhere are waking up to cryptocurrency taxation, so be sure your figures are up to date.