IRS Rewards Honest Crypto Tax Payers With Tax Refunds, Clears Crypto Tax Confusion
Over the last two years the United States Internal Revenue Services (IRS) has been having strict vigilance over crypto activities within the country. In a positive turn of events, the IRS has decided to issue refunds to several cryptocurrency traders who have correctly declared their holdings and paid the due tax.
A report by Law360 shows that crypto users were asked to submit the declaration of their transactions and any profit/loss made at the time of filing. The refund initiative from the IRS shows that the tax agency is not willing to go after or punish people, who have demonstrated their honesty.
The total number of refunds issued by the IRS is not known still. Last month itself, the IRS had issued crypto tax guidelines. However, the crypto tax payers still had several questions pertaining to tax calculations on crypt transactions done before 2018.
The tax payers have expressed concerns over the ambiguity of events like promotional airdrops and cryptocurrency hard forks. Christopher Wrobel, an attorney in the IRS Office of Associate Chief Counsel (Income Tax and Accounting), has confirmed that the revenue ruling shall not be applicable to promotional airdrops.
He added: “The IRS hasn’t yet decided whether such promotional airdrops should be treated as taxable”.
The new crypto tax guideline states: “When you receive cryptocurrency from an airdrop following a hard fork, you will have ordinary income equal to the fair market value of the new cryptocurrency when it is received … provided you have dominion and control over the cryptocurrency so that you can transfer, sell, exchange, or otherwise dispose of the cryptocurrency.”
On the other hand, the IRS has also confirmed that it will continue to closely monitor all crypto activities. The tax agency told Bloomberg Law that it is very focused on tax issues raised by Bitcoin ATMs and other cryptocurrency kiosks.
IRS Criminal Investigation Chief John Fort said that his agency is working with other law enforcement partners to closely monitor any illicit activity happening on the kiosk terminals.
“We’re looking at those, and the ones that may or may not be connected to bank accounts. In other words, if you can walk in, put cash in and get bitcoin out, obviously we’re interested potentially in the person using the kiosk and what the source of the funds is, but also in the operators of the kiosks,” said Fort.
“They’re required to abide by the same know-your-customer, anti-money laundering regulations, and we believe some have varying levels of adherence to those regulations,” he added.