Much To the Surprise Of Taxpayers, the IRS Ask For Reports on Crypto Acquisitions And Sales

Surprisingly, the 2022 tax season did not go through many challenges this time. The Internal Revenue Service (IRS) would easily meet the scheduled deadline, April 18, for the first time in the last three years.

Even with the ever-going COVID-19 pandemic’s complications, the agency was able to checklist returns filled by millions of individuals.

The IRS officials earlier issued a warning to prepare for a headache of an experience filled with customer-service shortages and delays.

The VP of Tax Operations at TaxAct, a tax-prep software company, Mark Jaeger, commented on this year’s rather seamless tax season.

Most taxpayers have simple taxes; they choose direct deposit after e-filing, making the process quite smooth.

But day traders using platforms such as Robinhood for filling the returns go through a cumbersome process. A tax preparer based in Washington, Nicole Rosen, notes that she has seen a rise in the number of clients leveraging platforms such as Robinhood to buy and sell stock.

Rosen explains that the additional forms are required by the trading stock, which further adds to the complication of the return filing process. While the normal filings take around two hours, the need for completing such returns is around four hours.

To the surprise of many taxpayers, the IRS asked them to report sales and acquisitions of crypto; meanwhile, the filing process went smoothly. A Friedman LLP partner, Mike Greenwald, says new crypto owners were especially surprised by the requirement.

Greenwald further states that the requirement demands a conversation that clients do not necessarily want to have right now as they don’t look at crypto assets in the same way as the IRS.

As the IRS continues its effort to find the best approach to tax the crypto sector. One example: the agency is aggressively pursuing Proof-of-Stake (PoS) mining rewards as income.

In 2019, Joshua Jarrett filed a lawsuit against the IRS regarding the matter. Jarrett debates the rewards need to be treated as a newly created property, and taxes should not be levied until he sells them. IRS originally denied the proposal of IRS for a refund until it appeared to be losing the case.

But then Jarett declined the offer giving the argument that accepting the refund would not exempt him from more taxation in the future. Jarett left the case open in the hope that the court would demand IRS to further offer guidance on the matter.

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Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing