IRS Finds Only 0.04 Percent of Filers Report Cryptocurrency Assets in 2017
As it turns out, Americans really don’t like paying taxes on their cryptocurrency capital gains. According to a recently published Reuters report, only 100 out of 250,000 U.S. citizens (0.04 percent) declared cryptocurrency assets while filing their taxes with credit score startup, Credit Karma. This number comes in stark contrast to a recent survey of Credit Karma users conducted by the company and independent research group Qualtrics, where nearly 57 percent of the 2000 Americans surveyed reported having realized some gains from cryptocurrencies.
This report comes a little over a week since Securities and Exchange Commission (SEC) chairman John Clayton testified in front of the US Senate banking committee regarding the legality of Initial Coin Offerings (ICOs) and the overarching future of cryptocurrency regulation. While Clayton had some negative words for the ongoing ICO craze, his message was overall upbeat and optimistic, describing the ICOs he has reviewed as “securities.”
Many believe that the reluctance of Americans to declare their cryptocurrency gains will be the primary platform by which the SEC and IRS will begin to drive stricter regulations. We can see a clear example of this back in Nov. when Coinbase was ordered to report 14,355 users to the IRS.
Ultimately, cryptocurrencies are going to be treated as securities and thus, will abide by capital gains tax law. As long as Americans continue to evade the tax man, we anticipate a stricter focus by the IRS to implement methods to better track cash flows and the crackdown on this ongoing tax fraud.