Crypto Tax: Variant Fund CLO Teases Lawsuit With IRS As Defendant

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Jake Chervasury, the Chief Legal Officer at Variant Fund, anticipates that the Internal Revenue Service (IRS) could soon face a legal challenge due to its belief that numerous cryptocurrency owners are currently avoiding paying taxes on their digital assets.

US IRS Maintains Surveillance To Enforce Tax Compliance

Chervinsky noted that the Internal Revenue Service (IRS) promptly employs financial monitoring as a method to curb cryptocurrency tax evasions.

Traders and crypto investors may bypass the tax agency’s awareness by utilizing peer-to-peer transaction technologies. These platforms enable trades to occur directly between parties, eliminating the need for intermediaries that enforce Know-Your-Customer (KYC) procedures.

Some believe that individuals are avoiding tax payments, and their proposed solution is increased financial monitoring. They are skeptical about the existence of advanced technology enabling peer-to-peer transactions without an intermediary for identification and reporting purposes.

— Jake Chervinsky (@jchervinsky) April 21, 2024

In more straightforward terms, the Internal Revenue Service (IRS) has been pushing for crypto tax reporting for some time now, but they’ve ramped up their efforts significantly recently.

In January, the agency announced new tax reporting regulations for the crypto sector. Accordingly, crypto platforms and wallet holders are required to report any transactions exceeding $10,000. This obligation includes providing additional information such as their name, address, and social security number.

The tax authority requires this data to promote openness and responsibility, enabling effective monitoring of a fair trading environment.

IRS Strengthens Crypto Tax Reporting Efforts

To strengthen its crypto tax reporting initiatives, the IRS brought on board Raj Mukherjee, formerly the global head of tax at ConsenSys. This hire underlined the IRS’ determination to maintain a leading role in enforcing tax laws in the rapidly evolving cryptocurrency sector.

Some companies are following the trend and aim to simplify the crypto tax reporting experience for traders. For instance, CoinLedger, a prominent tech company specializing in creating crypto tax reporting tools, recently entered into a strategic collaboration with MetaMask to streamline this complex procedure.

Collaboratively, they aim to simplify the process of preparing tax reports by consolidating information from various accounts and digital wallets.

MetaMask, as a self-custody wallet provider for Web3.0, simplified the process of synchronizing functionality and compatibility. By connecting their portfolios to CoinLedger, users can effortlessly produce tax forms straight from their MetaMask Portfolio.

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2024-04-22 01:09