Admin Source : Gadgets 360
The US, where estimates suggest 40 percent of adults currently hold crypto assets, is expecting to see a rise in tax evasion cases. The US’ Internal Revenue Service (IRS) is already gearing up to handle these cases. The information was disclosed by Guy Ficco, the chief investigating officer of the IRS in the US. Ficco was speaking at the Chainalysis Links event in New York. As per the IRS official, the agency has already been seeing a rise in the number of ‘pure crypto tax crimes’ — that are separate from instances of fraud, money laundering, and scams.
The US reportedly levies taxes ranging from zero percent to 20 percent on long term capital gains. Entities that made up to $44,626 (roughly Rs. 37.2 lakh) in profits from crypto activities in 2023 will not need to pay any long-term Capital Gains Tax. Short-term capital gains, however, are taxed by up to 37 percent, depending on the profits accumulated in the US.
US nationals who knowingly lie about their crypto profits while reporting taxes are charged under the Title 26 tax code in the US. Currently, the IRS is trying to identify and crack down on this category of people.
“This could be purely not reporting income generated from crypto sales, it could be hiding the true basis in crypto. So that’s an area that we’ve seen an uptick and I anticipate there’s going to be more charged Title 26 crypto cases this year and going forward,” Ficco told CNBC in an interview.
Arming up to tackle this expected rise in crypto tax evasion cases, the IRS in the US is already forging partnerships with different divisions of law enforcement to improve the criminal identification process.
In addition, the IRS has also teamed up with Chainalysis, a blockchain analysis firm. With the help of Chainalysis, the US IRS is looking to understand the loopholes in Web3 protocols or settings that cyber criminals could exploit to get their way.
While the US is preparing to deal with crypto tax evaders, shocking details on international tax evasion cases were reported in 2023 by Divly, a Sweden-based tech research firm. The research platform, at the time, had claimed that only 0.53 percent of global crypto holders paid taxes on their crypto incomes in 2022.
As per the Divly report, at the time, Philippines had the lowest percentage of crypto taxpayers at just 0.03 percent. India had ranked third last on this index with just 0.07 percent crypto holders who had paid their crypto taxes.
In India, where all crypto profits are taxed by 30 percent, crypto players are integrating taxation services to their platforms so that their users can compute the amount and pay the government. Indian Web3 community believes that if it shows discipline and consistency in adhering to government laws, authorities could become more responsive to their needs and offer stronger support to the growth of the sector.
In July last year, Taxnodes, a crypto taxation firm, had announced that it would offer complimentary NFTs to people paying their crypto taxes through its platform.
