The IRS has been blinded by the desire to beat cryptocurrency. He throws himself into execution without thinking of how best to achieve it. It has spent millions of taxpayers’ dollars training its employees and hiring private contractors to spot violations by cryptocurrency users. Tax authorities are arming their employees to enforce tax laws that apply to cryptocurrencies. At the same time, it ignores “well-established” frameworks to help enforce tax compliance and collect cryptocurrency transactions.

Cryptocurrency tax amnesty is the easiest and most equitable way to get from Point A to Point B, but tax authorities prefer dishonest and aggressive methods that disproportionately affect the taxpayer group – the youth.

This much-publicized amnesty program began over 10 years ago. This is a really cool plan. In March 2009, the IRS announced an external tax amnesty program called the Overseas Voluntary Disclosure Program, or OVDP. The program emerged in response to the fact that American taxpayers neither report on their accounts with foreign banks nor do they report billions of dollars in income taxes. In exchange for voluntary disclosure of information and payment of taxes, the OVDP gave taxpayers the opportunity to avoid prosecution and pay much lower (sometimes not paid at all) fines. Without OVDP, taxpayers faced imprisonment and various harsh civil penalties. The program was a huge success, with around 15,000 pieces of information made available in just seven months, resulting in nearly $ 3.5 billion in taxes, fines and benefits.

Seeing the benefit of OVDP, the IRS program expanded to include more iterations. In total, about 56,000 taxpayers were filed, and the IRS collected more than $ 11 billion in tax arrears, penalties, and fines. Even the worst forecasters could have expected a similar outcome with the cryptocurrency amnesty program. Think about this: There’s a crypto tax difference of $ 25 billion, nearly 37 million Americans now own some form of cryptocurrency, and the compliance rate is only about 50%.

The tax gap is large enough, the population is large and the degree of compliance is bleak. For this reason, a coded tax amnesty could result in much more OVDP disclosure and a much higher tax dollar increase. The similarities are clear, but there are some important differences that also enhance the forgiveness of cryptography.

Demographic data from cryptographers
The first difference lies in the demographics of cryptocurrency users. Almost 60% of Bitcoin (BTC) users are under the age of 35, 17% of whom have barely completed high school and are now in their early twenties. This is important because this demographic is the least experienced group of taxpayers. Unlike taxpayers involved in foreign transactions, thousands of years are unlikely to understand the nuances of profit and loss reports, capital loss thresholds, capital expenditures, tiered losses, base increase, tiered base, fundamental adjustments, the list goes on. And continues.

Despite the lack of experience and youth, the IRS refuses to offer a tax amnesty program for users of cryptocurrencies. Instead, the IRS offered a tax amnesty to a more experienced group of taxpayers involved in overseas operations. These taxpayers are more likely to understand the nuances of tax law and the employment of tax attorneys and tax experts, and are more likely to be tax “fraudsters”, while cryptocurrency fraudsters are often unintended. In any case, the IRS is badly targeting less experienced demographic groups.

On this topic: A cryptocurrency could save thousands of years of an economy that failed

Aside from simple demographics, the injustice is greater. Foreign Banking Accounting, or FBAR, is an essentially strong area of ​​tax law, while taxes on cryptocurrencies are not. Justice states that amnesty must be offered based on the simple fact that cryptocurrency taxes are often misunderstood and are a new and emerging area of ​​tax law. The rules have not been agreed upon, and current IRS guidelines consist of only two IRS announcements and a set of frequently asked questions – which, incidentally, are not legally binding on the IRS. That is, the coded taxpayer cannot legally trust him. Until legally binding guidelines are issued and rules are better developed, amnesty with tax liability in cryptocurrency is the fairest solution.

Cryptocurrency demographics are further complicated by the fact that third-party reporting on cryptocurrency transactions is practically non-existent (only two of the nine cryptocurrency exchanges in the United States have published transaction reporting guidelines). In other contexts, taxpayers can rely on 1,099 annual or intermediary reports to report capital and capital gains or losses. This is out of reach for most taxpayers in their twenties who engage in converting cryptocurrency and may only use simple W-2 tax returns. Instead, they need to sit down in pencil and paper and track spot prices (unreliable on the NYSE), determine true market value, base adjustments and calculate profits.

Source: CoinTelegraph