Yesterday’s news that the DoJ and IRS are digging into Binance amid whispers about allegations of tax fraud, manipulation and AML violations was just the latest indication from the government that it is taking enforcement of securities taxes tied to crypto wealth very seriously. In case that wasn’t already clear, WSJ published a story in its “Tax Report” section (with the federal tax deadline just days away at May 17) reminding readers that the IRS under President Joe Biden is coming for your crypto wealth – and those that don’t cough it up might be subject to harsh penalties, both financial and criminal.
Article from Zero Hedge.
It starts by reminding readers that two new IRS investigations to catch crypto tax cheats targeting various exchanges have been launched in recent months. In April, a judge in Boston approved an IRS summons to the payments company Circle and its affiliates, including the crypto exchange Poloniex. In May, a judge in San Francisco approved a similar summons for records from Kraken, another exchange based in California. Both summonses apply to customers who have traded more than $20K in crypto in any single year between 2016 and 2020.
“With these summonses and other actions, the IRS is mounting a full-court press to show taxpayers how seriously it takes cryptocurrency compliance,” says Don Fort, a former chief of IRS criminal investigation now with Kostelanetz & Fink. “Taxpayers should take it seriously too.”
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Crypto exchanges don’t report client information to the IRS like discount digital brokerages do, so there’s temptation for traders to try and skate by. But if this approach worked in the past, be warned: that could change this year now that the Dems are back in power.
Binance doesn’t even allow American customers to trade on its platform (though it has been accused of illegally doing so by turning a blind eye to users trying to skirt this rule), but other investigations and summonses of note go back even further. In 2016, the IRS received approval for a similar summons for Coinbase and obtained information for about 13K customers. The agency sent letters urging many of them to make sure their crypto taxes were paid, as the IRS might soon be taking a hard look.
Admissions from the IRS in court filings suggest this tactic has been working for the agency. In one filing to justify its summonses, the the agency said it had received more than 1,000 amended tax returns and collected $13 million from crypto holders with more than $20,000 of transactions, plus another $12 million from other crypto notices, and audits are ongoing.
Remember, those who are caught skirting taxes often are forced to enter the IRS’s Voluntary Disclosure program for taxpayers with criminal liability, a program that usually lets participants out of prosecution but imposes large penalties.
Another filing hinted at a different strategy being employed by the agency: the agency plans to compare data it receives from Kraken to data on offshore crypto transactions. It didn’t identify the source of this offshore data to look for discrepancies. Kraken may also soon need to turn over phone numbers, email addresses, DoBs, tax ID numbers and other sensitive details as part of the subpoena.
With all this in mind, here’s a few quick reminders from WSJ:
When it comes to crypto tax laws, here are the basics: In 2014, the IRS declared that cryptocurrencies are property, not currencies like the dollar, and therefore are treated like an investment property akin to stocks. If an investor sells crypto after holding it for longer than a year, the profit is a typically considered a long-term capital gain, and taxed at lower rates than ordinary income under current law (although Congress may soon change this for the highest earners).
If the holding period is a year or less, the profit is a taxed as a short-term capital gain as the same rate as ordinary income like wages. Capital losses on crypto investments can offset taxable capital gains on other assets as well as crypto, plus up to $3,000 of ordinary income such as wages a year—a valuable benefit. Unused losses can be carried forward to future years.
Tax triggers: Any time a cryptocurrency is bought or sold or spent is a taxable transaction. If you trade bitcoin for dogecoin, that transaction has tax exposure.
If you buy a tesla, you will owe an additional tax on the transfer on top of any sales taxes you pay. These rules make bitcoin difficult to use for payments, something that regulators no doubt intended.
Lot identification: Investors who bought the same coin at different prices can often minimize taxes by selling the lot that would give them the smallest tax exposure. For example, say that someone sold bitcoins at $22,000 each in December 2020 and had coins bought in 2016 for $600 and 2017 for $16,000. Selling the 2016 coins would mean a taxable gain of $21,400 each, while selling the 2017 coins would mean a gain of $6,000 each—a big difference.
Offshore holdings: In late 2020, the Financial Crimes Enforcement Network, a Treasury Department unit known as FinCEN, announced that it may soon require US taxpayers holding more than $10,000 of cryptocurrencies offshore to file FinCEN Form 114, known as the FBAR, to report these holdings. But this rule has yet to be adopted, and wasn’t in effect for 2020.
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Source: WSJ
Will America-First News Outlets Make it to 2023?
Things are looking grim for conservative and populist news sites.
There’s something happening behind the scenes at several popular conservative news outlets. 2021 was bad, but 2022 is proving to be disastrous for news sites that aren’t “playing ball” with the corporate media narrative. It’s being said that advertisers are cracking down, forcing some of the biggest ad networks like Google and Yahoo to pull their inventory from conservative outlets. This has had two major effects. First, it has cooled most conservative outlets from discussing “taboo” topics like Pandemic Panic Theater, voter fraud, or The Great Reset. Second, it has isolated those ad networks that aren’t playing ball.
Certain topics are anathema for most ad networks. Speaking out against vaccines or vaccine mandates is a certain path to being demonetized. Highlighting voter fraud in the 2020 and future elections is another instant advertising death penalty. Throw in truthful stories about climate change hysteria, Critical Race Theory, and the border crisis and it’s easy to understand how difficult it is for America-First news outlets to spread the facts, share conservative opinions, and still pay the bills.
Without naming names, I have been told of several news outlets who have been forced to either consolidate with larger organizations or who have backed down on covering certain topics out of fear of being “canceled” by the ad networks. I get it. This is a business for many of us and it’s not very profitable. Those of us who do this for a living are often barely squeaking by, so loss of additional revenue can often mean being forced to make cuts. That means not being able to cover the topics properly. Its a Catch-22: Tell the truth and lose the money necessary to keep telling the truth, or avoid the truth and make enough money to survive. Those who have chosen survival simply aren’t able to spread the truth properly.
We will never avoid the truth. The Lord will provide if it is His will. Our job is simply to share the facts, spread the Gospel, and educate as many Americans as possible while exposing the forces of evil.
To those who have the means, we ask that you please donate. We have options available now, but there is no telling when those options will cancel us. We have our GivingFuel page. There have been many who have been canceled by PayPal, but for now it’s still an option. Your generosity is what keeps these sites running and allows us to get the truth to the masses. We’ve had great success in growing but we know we can do more with your assistance.
Thank you, and God Bless!
JD Rucker
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