IRS Serious About Crypto Reportings in its New Draft Form

Steve Anderrson
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain. Join the official channel of thecoinrepublic, For the latest news updates: https://t.me/thecoinrepublic
  • The Internal Revenue Service (IRS) has recently released the draft form 1040 for the US individual income tax return.
  • On the very first page of the form, the IRS asks the taxpayers whether they have sold, bought, or acquired any financial interest in the virtual currencies or not.
  • In 2019 the IRS had mailed almost 10000 taxpayers who had failed to report the transactions and their respective taxes or have reported the information incorrectly

The Internal Revenue Service (IRS) has recently released the draft form 1040 for the US individual income tax return. The draft form may seem quite similar to the previous 2019 tax return form, but it has major differences when it comes to crypto assets reporting. This time IRS seems serious and has come up with stricter measures to keep a track over cryptocurrency transactions. 

IRS Enquires About Crypto Holdings and Transactions

Back in 2019, the IRS issued a new tax form that enquired about the holdings of the taxpayers. The same specific question that was asked in this recent 1040 draft form. On the very first page of the form, the IRS asks the taxpayers whether they have sold, bought, or acquired any financial interest in the virtual currencies or not. And besides that, a checkbox is provided. According to the IRS standards, if people sell cryptocurrency or receive gains on those crypto assets they are bound to report the transactions. In addition, if people received cryptocurrency from their employer, then it was subject to federal unemployment taxes.

Taxpayers Are Not Reporting Crypto Transactions Properly

The above measure has been taken because the IRS has found that many taxpayers are not correctly reporting their cryptocurrency transactions and some are not reporting at all. In recent research conducted by IRS it was found that during the time period of 2013 to 2015, the number of taxpayers reporting virtual assets transactions decreased gradually. During 2013, only 807 individuals declared their transactions involving cryptocurrencies. In the next year (2014), the number increased to only 893 before falling down to only 802 in 2015. 

Crypto Assets Compliance Top Priority of IRS

The IRS has always prioritized cryptocurrency reporting. Prior to this, in 2019 the IRS had mailed almost 10000 taxpayers who had failed to report the transactions and their respective taxes or have reported the information incorrectly. However, this hasn’t always been the case for the IRS. Back in 2018, the IRS had announced that they would make these cryptocurrency reportings non-compliant. However, later they realised that without proper and correct information about the tax information related to virtual assets, the authority would fail to support claims regarding crypto assets.

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