EDITOR NOTE: Apparently, tax evasion is multiplying at the speed of NFT (non fungible token) replication, and the funny thing is that many of the evaders may not even realize they owe capital gains taxes. According to the article below, the IRS is missing approximately $1 trillion in taxes owed due to cryptocurrency transactions. Bear in mind, crypto is a $2 trillion market. That’s a pretty large chunk. So, in response, the IRS is entering netherworld territory of the darkweb to snoop around and find Uncle Sam’s evaders. What’s unremarkable yet infuriatingly intrusive about this whole thing is how the government decided to impose taxes on assets that originally came into existence to avoid the very hassle that’s being hoisted upon them. More concerning to us is the possibility that the government may extend its intrusive gaze into our private gold and silver holdings, particularly in times of national emergency. This is why we emphasize the purchase of non-CUSIP gold and silver. The government can’t surveil or snatch gold they’re not aware of. It’s much more effective yet much safer (hence, smarter) than storing “traces” of your digital assets in the darkweb where hackers and other sinister spirits may roam.
Tax evasion using cryptocurrencies is “replicating” with nonfungible tokens and other new crypto-related products, according to IRS Commissioner Charles Rettig.
In testimony before the Senate Finance Committee, Rettig said Tuesday the U.S. fails to collect as much as $1 trillion in taxes owed each year in part due to the explosion in cryptocurrencies, which are difficult for the agency to track and tax.
Rettig said the crypto economy — now valued at over $2 trillion globally — continues to expand, specifically mentioning NFTs, as an example.
“So now we have these nonfungible tokens, which are essentially collectibles in the crypto world,” Rettig said. “These are not visible items by design. The crypto world is not visible.”
“In the criminal context, the IRS criminal investigations, cybercrime unit has been spectacular operating in the dark web, engaging with cryptocurrency-related transactions,” Rettig added.
Answering a question from Republican Sen. Rob Portman of Ohio — who said he is working on a bill to require more reporting and disclosure around crypto transactions — Rettig noted that “absolutely, reporting with respect to cryptocurrencies would be important.”
Cryptocurrencies are taxed by the IRS as capital assets, not currencies. Thus, holders of the cryptocurrency are required to pay capital gains taxes if they sell their crypto for a profit or use it for a purchase. Tax experts say many crypto holders are either unaware of the requirement or avoiding the tax.
Platforms such as Coinbase — which fought an IRS request for customer data in 2016 — now report some customer information to the IRS. But tax experts say clearer government regulation is needed to require more taxpayer disclosure.
As a sign of how important crypto tax evasion has become to the IRS, the agency added a question to the top of the Form 1040 — the main income and tax reporting form — asking: “At any time during 2020, did you receive, sell, send, exchange or otherwise acquire any financial interest in virtual currency?”
NFTs have also exploded in value and popularity in recent months, raising a whole new set of tax questions.
NFT sales topped $2 billion in the first quarter in the platforms tracked by NonFungible.com. Although NFTs are purchased with crypto — usually ether — many U.S. NFT buyers are not aware they have to pay a capital gains tax when they use appreciated crypto to make a purchase.
Original post from CNBC