Gary “Silk Road Sheriff” Alford was instrumental in catching online drug cartel kingpin Ross Ulbricht. And now he works for the IRS as a cyber-crime coordinator. He recently sat on a panel and said a few things that every cryptocurrency participant and investor should heed.
Authorities Are Now Concerned with More than Just Crypto Fraud; They Want to Ensure You’re Paying Crypto Taxes Too!
When initial coin offerings first hit the scene, authorities focused on companies suspected of using the platform for money laundering and fraud. But according to Alford, the IRS is now adding “routine enforcement” to its focus list.
The IRS Is Ready To Investigate and Prosecute People It Suspects of Bitcoin and Crypto Malfeasance
At the panel event, Alford explained that increased public awareness of digital currencies sets the table for greater prosecutorial success. He expounded:
“We’re usually behind the curve — history is made and then we react to it. But in this case, we are ahead of the curve. We were there on ground zero, and we were waiting for the rest of the world to catch up to what we already knew…We already are aware that there were cases to be made, we just didn’t know if we were at the point where we can bring it for criminal prosecution. We believe we are at that point now. If we had 12 jurors and told them someone made all their money in bitcoin, we believe that they would understand.”
Though the IRS has a more confident grasp of the crypto ecosystem than it did five years ago, another participant explained that they’re still grappling with calculatory details associated with technical anomalies, like forks.
Reminder: The IRS Treats Crypto like Stocks
Currently, the Internal Revenue Service treats cryptocurrency gains like it does capital gains derived from selling stocks. Or, to put it another way: crypto is classified as property, not money. Yet, for the past several years, only a small fraction of holders have reported gains and losses associated with digital currency holdings.
The IRS is on the Hunt for Crypto Tax Evasion
In its quest to increase tax revenue coffers, the IRS is on the hunt for both serious and casual crypto investors who haven’t reported properly — and the agency is encouraging people to come forward on their own volition.
As tax law attorneys, we cannot stress the advantages of voluntarily disclosures enough. Fessing up results in decreased penalties and a much more pleasant and flexible experience.
Moreover, ignorance usually doesn’t work as a viable excuse . As Alford said at the panel discussion:
“You might have bitcoin on everything, but when you go to your accountant, you say, ‘Oh, I’ve never heard of bitcoin.’ Really? Every date you’ve ever been on, that’s all you talked about was bitcoin, but somehow when your accountant asks you, you forgot to talk about it?’ That’s our burden to show this individual knew.”
Connect with a Cryptocurrency Tax Lawyer
The Gordon Law Group works with cryptocurrency holders and businesses on a spectrum of tax issues. Simply need a hand figuring out how much you owe? We can help. Want to consider offshore options? We’ll walk you through it. Audited? We’re here to represent your best interests and fight on your behalf. Our team of digital tax lawyers also earns top marks for developing the most profitable — and compliant — tax positioning plans.
Get in touch today. Let’s talk about how we can save you money and keep the IRS at bay.