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IRS Questions Lack of Filing

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One of the reasons given for the sudden surge in Bitcoin value, which only happened recently, was that many American investors were selling their coins ahead of tax collection.

Whilst this may or may not have been the reason, the IRS (Internal Revenue Service) has now released data on exactly how many people have reported capital gains from their cryptocurrency investments.

The results are far from compelling – not even 1% of the traders dealing in cryptocurrencies have reported any of their activity yet.

With the deadline for tax filing fast approaching, the IRS questions the current state of affairs.

Few have reported capital gains from cryptocurrencies

The IRS has suggested that fewer than 100 individuals have reported any capital gains or losses on their cryptocurrency investments by April 13th.

Since there are a quarter million people thought to be involved in cryptocurrency trading, that comes out to less than 0.04%.

This is seen as somewhat suspicious, seeing as 2017 was a very good year for some – and very bad for others.

Regardless of what happened with the investments, the IRS expected quite a few reports on it.

That, however, did not happen.

Complexity could be the reason

One of the reasons for this could be the uncertainty surrounding how exactly to report such gains or losses.

A representative of Credit Karma, Jagjit Chawla, opines:

“There is a very good probability that the perceived complexities of reporting cryptocurrency gains are pushing filers to hold out till the quite past minute.”

However, the reporting of cryptocurrencies like Bitcoin should be nothing new to US investors.

The IRS has been providing guidance on how to report transactions for the past four years.

The fact that Bitcoin has been around, and presumably traded in, since 2008 should also be a cause for suspicion.

The IRS considers cryptocurrencies to be assets, which means that they are to be treated like any other physical property.

In this sense, cryptocurrencies are treated in the exact same way as making a profit from buying and selling houses or land.

Regardless of whether one is trading or mining cryptocurrencies, tax applies.

Nothing new under the sun

Despite the worryingly low figures, the IRS is used to this lack of activity.

The current figures are actually not very odd, considering that only 802 people filed any capital gains or losses back in 2015.

That said, the 2017 tax year saw a huge increase in cryptocurrency trading compared to the preceding years.

This has raised some suspicion and led some people to believe that cryptocurrency traders are underreporting on their activities.

The IRS, however, remains calm.

Although the deadline is approaching with increasing speed, there is still time for the cryptocurrency traders to file their capital gains and losses.

What do you think the reason for the late filing is? Are you a cryptocurrency trader? If so, why (or why not) would you wait with filing your gains and losses? Are the tax laws too complex?

Leave your comments below!

I’m a freelance writer and full-time curious person. My main interests are philosophy, politics, art, culture, science, and how they’re all interlinked. When I’m not writing, I’m fronting a band, producing records, and making videos. I’m also currently working on launching a YouTube channel that will focus on culture and politics. I think blockchain technology is fascinating because of the huge potential it has to revolutionise not only the financial sector, but society as a whole.