Variant Fund’s Chief Legal Officer Jake Chervinsky is positive that there may be a looming lawsuit with the Internal Revenue Service (IRS) as the potential defendant. This big expose comes as the agency believes that many crypto holders are currently evading tax.
US IRS Maintains Surveillance To Enforce Tax Compliance
Chervinsky pointed out that the IRS is quick to turn to financial surveillance as a means to control crypto tax evasion.
He believes that the tax agency is oblivious to the fact that traders and crypto investors could leverage some technologies that support the use of peer-to-peer transactions. Leveraging such platforms means that traders can do without an intermediary that reports or requires a Know-Your-Customer (KYC) process.
They think people are evading taxes and the only way they know to address that concern is through financial surveillance, and they don't accept the idea that there's technology allowing people to engage in peer-to-peer transactions without an intermediary who can KYC and report.
— Jake Chervinsky (@jchervinsky) April 21, 2024
The IRS has been demanding crypto tax reporting for a very long time, but it intensified efforts in recent weeks.
Precisely, the agency moved to release new tax reporting rules for the crypto industry in January. Per the rules, crypto exchanges and custodians are mandated to report transactions above the specified threshold of more than $10,000. This needs to be done in addition to submitting their name, address, and social security number.
For the tax institution, getting this information is a way to encourage transparency and accountability in a bid to oversee a transparent market.
IRS Strengthens Crypto Tax Reporting Efforts
To bolster this crypto tax reporting effort, the IRS even hired Sulolit “Raj” Mukherjee, who had previously worked as the global head of tax at ConsenSys. This move signaled the IRS’ commitment to staying ahead in terms of enforcing compliance with tax regulations in the evolving world of cryptocurrencies.
In the same vein, some firms have taken it upon themselves to make the crypto tax reporting process easier for crypto traders. CoinLedger, a leading technology platform that is focused on producing crypto tax reporting software inked a strategic partnership with MetaMask to simplify the daunting process.
Together, they plan to eliminate the complexities involved in documenting tax reports from different accounts and wallets.
For the Web3.0 self-custody wallet provider MetaMask, this was a means to streamline interoperability and functionality. Users get to sync their portfolios with CoinLedger directly and then automatically generate tax forms directly from the MetaMask Portfolio.
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