The Internal Revenue Service of the United States is still considering giving recommendations for the digital currency business. However, even as digital currency holders wait for concrete standards to govern their tax reporting, the Internal Revenue Service (IRS) included it as one of its priorities in a recent strategic plan for the coming year.
The IRS and the US Treasury Department recently released the Priority Guidance Plan for 2021-2022. “Guidance concerning virtual currency” was listed under “general tax issues” in it. The IRS has also identified ‘regulations related information reporting on virtual currency under Section 6045’ as a priority for the 2018 fiscal year.
The IRS named tax laws for virtual currency holders as one of its objectives in its 2020 guidance strategy. However, except for issuing many warning letters about their obligation to declare their virtual currency earnings, the tax agency has done little to explain the taxation rules for digital currency users.
Despite the glacial pace of developing tax laws, the IRS has stated that it will not relent in its pursuit of digital currency taxation. It presented its budget and performance report for the fiscal year 2022 three months ago, laying out how it plans to step up its efforts to pursue virtual currency users who aren’t paying their taxes.
Contracts are being awarded to companies that will assist them in pursuing tax evaders. For this reason, the agency has asked Congress for an additional $32 million to expand its digital currency and cyber activities. The cash will be used to fund, among other things, a project it has already begun to develop a comprehensive internal dashboard for virtual currency and blockchain analytics.
Last month, the IRS dispatched an undercover agent to disrupt a digital currency money laundering, tax evasion, and drug trafficking organization. To catch an Indiana dark web drug dealer, the agent went by the moniker Mr. Coins and transacted over $200,000 in BTC on Localbitcoins.com.The IRS is still working on tax rules for digital currencies.