The Tax Man is Coming for Bitcoin: IRS “Enforcement” Impending in 2021
Bitcoin is entering 2021 in the best place its ever been. With strong movements past $30,000, the whole world is waiting to see how high Bitcoin will go. But while BTC holders’ pockets are busting with cash, the United States’ tax arm, also known as the Internal Revenue Service (IRS), is gearing up for a crackdown on unchecked earnings.
Indeed, in an article for Law360, Don Fort (who previously headed the IRS’ criminal investigation division) said that while the tax agency has was previously taking a more “educational” attitude toward cryptocurrency holders, school days are over: the time for “enforcement” has come.
“The IRS has been not-so-quietly positioning itself for a smooth transition from education to enforcement in 2021 and beyond,” he wrote. The article was co-authored by Lawrence Sannicandro, a lawyer who has focused his career on federal and state tax controversies. Both men are part of the team at Kostelanetz & Fink, LLP.
“[…] Even though the IRS has not yet announced many mainstream tax evasion or money laundering cases involving virtual currency, that trend should change in 2021,” Fort and Sannicandro wrote.
Indeed, in December 2020, CoinTelegraph reported on the addition of a crypto-related question at the top of form 1040. This seems to indicate that the IRS is preparing to eradicate underpayment.