IRS Teams With Four Other Countries To Combat Cryptocurrencies Tax Crimes
The U.S Internal Revenue Authority has teamed up with tax authorities from the United Kingdom, Canada Australia, and New Zealand as the countries look to take cryptocurrency tax fight to the next level. The five countries have come together to fight transnational tax crimes associated with virtual currencies.
The rate at which people are using cryptocurrencies to evade paying their due share of taxes in addition to committing other financial crimes remains a big point of concern. In a statement, the five countries made it clear their willingness to work together to investigate those who enable transnational tax crime.
The countries have also come together to combat the threat posed by cryptocurrencies to tax administrators as well as cybercrime. The companies will also work together to combat the use of virtual currencies in money laundering activities even as it emerges some are using them to finance terrorist activities.
“We cannot continue to operate in the same ways we have in the past, [sic] siloing our information from the rest of the world while organized criminals and tax cheats manipulate the system and exploit vulnerabilities for their personal gain,” J5 in a statement.
The IRS has already classified digital assets as currencies which mean they are subject to income tax laws. The classification is part of the regulator push to generate significant income from an industry that is no longer considered a fad but one that has the potential to compete with other mainstream markets.
People dealing in cryptocurrencies were required to file their tax returns in the run-up to the tax filing deadline in the U.S. While the IRS did collect a substantial amount of taxes, it later emerged that the people were either underreporting or failing to report at all. The IRS faces an uphill task to hit its tax target given that it is tough to track cryptocurrency transactions.
Even as the IRS moves to collect its due share from virtual currencies, there have been calls for authorities to do more when it comes to monitoring and regulation of the sector. Some people have accused the regulator of implementing draconian tax laws that will only scare investor’s, therefore, stifling growth in the cryptocurrency sector.
The IRS has since been urged to simplify tax laws touching on cryptocurrencies as they are quite confusing as it stands.