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IRS to challenge users who do not report and pay tax on crypto transactions

by SuperiorInvest

As the crypto community grows and trading volumes reach new highs, the United States is also making greater efforts to ensure that its Internal Revenue Service (IRS) can properly collect cryptocurrency tax.

US Attorney Damian Williams, Deputy Assistant Attorney General David Hubbert and IRS Commissioner Charles Rettig he announced that U.S. Magistrate Paul Gardephe authorized the IRS to issue a “John Doe subpoena,” a term used when the IRS investigates unknown taxpayers.

The subpoena compels New York-based bank MY Safra to produce information on taxpayers who may have failed to report and pay taxes on their crypto transactions. According to the announcement, the IRS is specifically looking at users of the SFOX crypto exchange.

The IRS believes that while cryptocurrency users are required to report profits and losses, taxpayers are significantly out of compliance when it comes to digital assets. According to Williams, the government will use all its tools to identify taxpayers and ensure that everyone pays their taxes. He explained that:

“Taxpayers are required to truthfully report their tax liabilities on their returns, and liabilities arising from cryptocurrency transactions are not exempt.”

On the other hand, Rettig said that the authorization of the John Doe challenge supports their efforts to ensure that taxpayers involved in cryptocurrencies “pay their fair share.”

Related: A tax expert says that buying cryptocurrencies is not a taxable event

Meanwhile, crypto analytics firm Coincub recently released a study that shows which country it is the worst in terms of cryptocurrency taxation. Belgium ranked first for its 33% tax on capital gains and withholding tax of 50% on business income. In second place are Iceland, Israel, the Philippines and Japan.

September 6. Australian Govt consulted with the public in terms of a new law that excludes cryptocurrencies from being considered foreign currency for taxation purposes. The government gave the public 25 days to comment on the proposal. If signed into law, the definition of digital currency in the country’s Goods and Services Tax Act will be revised.

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