US IRS eases reporting necessities for cryptocurrencies, however will increase enforcement efforts

In a previous post, we explained how the US Internal Revenue Service posted a question on the 2020 Tax Form asking if “At any point in 2020 you are receiving, selling, sending, exchanging, or giving up financial interests on virtual devices Other ways acquired currency. “The purpose of putting this question in a very important part of the tax form was to attempt to collect some of the significant amounts of unreported taxes related to cryptocurrency transactions, as virtual currencies are under US tax law Treated as property for federal income tax purposes. In an FAQ posted on the IRS website on March 6, 2021, the IRS made it clear that this question does not need to be answered in the affirmative if a taxpayer only has cryptocurrency with fiat in 2020 bought.

At the same time, Forbes reported that Damon Rowe, director of the Anti-Fraud Office for the Internal Revenue Service, announced at a Federal Bar Association presentation on anti-fraud priorities on March 5, 2021 that the office had a new dedicated team from IRS Criminal Investigation experts working on Operation Hidden Treasure. As Forbes explained, Operation Hidden Treasure consists of agents trained in cryptocurrency and virtual currency tracking that focus on taxpayers who omit cryptocurrency revenue from their tax returns. . . . [it] is a partnership between the Civil Anti-Fraud Office and the Criminal Police to eradicate tax evasion by cryptocurrency holders. “