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The IRS Is Coming for Crypto Investors Who Haven’t Paid Their Taxes
On the hunt for tax cheats, Uncle Sam is winning court battles to force cryptocurrency exchanges to reveal their customers. Your big unreported profits on bitcoin, ether or dogecoin could translate into big problems with the IRS.
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Bitcoin’s volatility has limited its adoption for payments, so entrepreneurs created stablecoins: cryptocurrencies pegged to assets such as the U.S. dollar. But the recent settlement of a probe into the most popular stablecoin, tether, shows the need for transparency in the growing industry. Photo illustration: Sharon Shi/WSJ
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May 14, 2021 5:30 am ET
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Cryptocurrencies are exploding—and so is the Internal Revenue Service’s pursuit of Americans who aren’t paying taxes on them. With Tax Day approaching, it’s a good time to clean up your act if you’ve been lax about taxes on crypto. Not doing so could compound future tax problems, especially if you have traded a lot or have more than a small stake.
Two new IRS efforts to find crypto tax cheats stand out: In April, a federal judge in Boston approved an IRS summons to the payments company known as Circle and its affiliates, including Poloniex, to turn over customer records to the agency. And in early May, a federal judge in San Francisco approved another IRS summons for records to the crypto exchange known as Kraken. In both cases, the turnover applies to customers who had more than $20,000 in transactions in any year from 2016 through 2020.
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