The internal revenue service (IRS) has reminded taxpayers about the need to make an annual Declaration of any income in bitcoin and other cryptocurrencies, CoinDesk writes.
Posted on Friday, March 22, the message the IRS notes that cryptocurrency transactions must be declared like any other types of property.
First of intent to levy cryptocurrency taxes the IRS announced in 2014, saying then that the gains and losses on transactions with digital currencies, if the latter are used as non-current assets will be treated as capital gains. Also taxable wages paid to employees in the cryptocurrency, while cryptocurrency payments to independent contractors and service providers must be included in Form 1099.
In its latest communication, the IRS has clarified its position, stating that cryptocurrency payments must be reflected in the tax returns.
“Payments made using virtual currency are subject to information report to the same extent as any other payments use of property”, — the document says.
The Agency also noted that taxpayers who do not declare properly the tax implications of cryptocurrency transactions may be subject to audit and, if necessary, incur administrative liability in the form of fines. In special “emergency situations” we can talk about the criminal responsibility for tax evasion, which involves up to 5 years in prison and paid a fine of $250 000.
Users who include in the tax Declaration obviously false data, could face up to 3 years in prison and the same fine of $250 000.
As the Agency notes, “some taxpayers may be tempted to conceal from the IRS taxable income”.
As previously wrote ForkLog, the IRS from the end of 2015 uses special tools to track users of bitcoin. To this end, the Department purchased a specialized security company Chainalysis software to identify users.