US cracks down on investors using digital currencies to avoid tax

A new push by the United States Congress to require crypto brokers to report transactions to the Internal Revenue Service could create some unwelcome tax bills but could clarify rules for traders and users of Bitcoin and other digital tokens, potentially strengthening the system in the long run, people in the industry say.

The new rules – a last-minute addition to the $US550 billion bipartisan infrastructure package now before the US Senate – would also force businesses to disclose trades of digital assets of more than $US10,000. The provisions are designed to raise $US28 billion.

The measures add to increased scrutiny the IRS has recently applied to traders of Bitcoin, Ethereum and other digital assets. The agency has promised it will issue new rules that clarify how those virtual currencies should be taxed.

People who trade digital currencies must pay income taxes on any gains, even if some crypto investors have been ignoring their tax obligations. But even for those who want to follow the law, it can be difficult to keep track of what’s owed.

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Source: US cracks down on investors using digital currencies to avoid tax