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IRS cracks down on cryptocurrency profits and trades

On Behalf of | Jun 1, 2021 | Blog |

Residents of the Seattle area and other parts of Washington who are interested in Bitcoin may want to know more about the new tax rules regarding cryptocurrency. In order to deter tax evasion and illegal activity, the Treasury Department announced that it will require reporting of a transfer of $10,000 or more to the IRS.

Both parties were eying regulation in 2021

Last year, Bitcoin and other digital assets sparked concerns of uninformed retail investments and market manipulation. Both Republicans and Democrats made regulation one of their priorities for 2021.

According to CNBC, the Treasury is calling for stronger compliance for cryptoassets and cryptocurrency exchange accounts. Businesses that accept cryptocurrencies would be fine.

The IRS sees illegal activity and tax evasion as a growing problem. In 2019, the difference between taxes owed to the U.S. government and those that were actually paid totaled nearly $600 billion.

Bitcoin sees a reversal

Bitcoin had been trading up more than 9%. After the announcement, there were reports that the last trading was 1.6%. Some are even thinking of capitulation.

In the long run, the regulation may be good for Bitcoin according to some commenters on the issue. It will protect investors and provide legitimacy to the trading of cryptocurrencies.

There is the question of whether other cryptocurrencies have succeeded previously due to the success of Bitcoin. They may be piggybacking on the success of Bitcoin and follow as that trend changes. New changes in tax law may affect everyone who owns these types of assets.

If you have tax law questions or need help with a tax issue, it might be best to consult with an attorney who has experience in this field. A client-focused attorney may help put you at ease through their knowledge and experience as they help you with an upcoming audit or the owing of a tax debt.