With the increase in profits made by dealing with cryptocurrencies, the US IRS (Internal Revenue Service) is taking crypto tax compliance to an international level. Together with the tax authorities from four other nations, the IRS has formed a J5 coalition that will fight tax crimes related to cryptocurrencies.
Cryptocurrencies are entering everyday life across all walks of life and crypto trading has reached a level that the IRS and other tax authorities can no longer ignore.
Increases in profits made by trading in crypto markets have caused tax regulators to seriously discuss the issue and come up with solutions, agreeing that the effort to reduce tax evasion needs to be increased and brought to the international stage. The agencies involved are seeking full monitoring, regulation, and enforcement of the related laws in order to ensure compliance by those dealing in digital currencies.
The coalition and its plans for the future
The IRS has joined forces with the agencies of four other countries and to create J5 – Joint Chiefs of Global Tax Enforcement with the UK, the Netherlands, Canada, and Australia.
For now, the role of the coalition will be to tackle the issue of transnational crypto-related tax crimes. One of the biggest reasons for forming this coalition, however, was to respond to the official call for help that came from OECD (Organisation for Economic Cooperation and Development).
An official statement from the IRS describes how they will investigate those suspected of committing international tax crimes and conducting money laundering operations, as well as those who benefit from such actions. The coalition will collaborate on an international scale to reduce the threats posed to tax administration by cryptocurrencies are reduced. It is hoped that this will lead to increased transparency in crypto, allowing users from around the world to make the most of it.
So far, the biggest concern for the IRS is how simple it is for crypto traders to evade tax and commit financial crimes in general, which has increased the need for an international governing body of this sort exponentially.
The IRS continued that they cannot operate as they have up to this point, acknowledging that financial technology has evolved and the methods of preventing tax crimes need to evolve at the same time so that these issues can be successfully controlled.
Crypto users complain about IRS laws
The agency asked crypto traders to report their income deriving from cryptocurrencies in this year’s tax reports but the large majority of crypto enthusiasts failed to comply. Not only that, but they complained about the agency’s laws, stating that they are confusing. This has led the IRS to create more direct and clear laws around cryptocurrency trading.
Still there is an attraction to the anonymity offered by cryptos to those perpetrating financial crimes. The IRS claims to be fully aware of this, and that such individuals and groups need to be stopped before they further damage the financial industry.
