IRS creates provision for citizens to declare Crypto assets to prevent tax evasion

The US Internal Revenue System (IRS) will add provisions for citizens to disclose their crypto assets in the 1040 form. Specifically, the tax body will insert the question “At any time during 2020, did you sell, receive, send, exchange or otherwise acquire any financial interest in any virtual currency?” The taxpayer is expected to answer with a ‘Yes’ or ‘No’. 

This is not the first time the revenue body is posing the question in the form. Last year, the document had the question, but was placed as a non-mandatory-to-answer. Now, the question doesn’t give room for whims. IRS requires an answer.

Expectedly, the move left tax experts off-guard. After all, the IRS has never issued a warning of this merit before. But from the standpoint of tax collector, this is a red alert for citizens avoiding tax using their digital assets. Actually, taxpayers holding digital assets but ticked ‘No’ in the form should brace themselves to face the full wrath of IRS.

More regulation to cryptos in the US?

This small but important change by the IRS beams its alertness on cryptocurrency initiated tax frauds. Apart from tax regulation, US legislators recently proposed a bill that would allow ‘one-stop-shop’ national licenses to crypto exchanges.

Clearly, the latest developments indicate that the US is keen on regulating cryptocurrencies in the country. And, it is noteworthy that tax evasion regulations on cryptocurrencies are part of a wider scheme of clandestinely accepting the use of digital assets.