Over the past few months, regulatory agencies have been taking cryptocurrency taxation and regulation more and more seriously. In fact, the IRS has made the decision to take a stand against cryptocurrency related tax crimes and fraud worldwide. The tax agency is uniting with other major tax authorities around the world that are struggling with the same cryptocurrency fraud and tax-based crimes.
Working together, the world’s tax agencies will surely develop a robust system of tax requirements and policies that address the growing financial products and services available in the ever-expanding fintech revolution. However, until then, the details of cryptocurrency tax remain a bit of a mystery for most. Given that the majority of young people are open to owning and using cryptocurrencies, this uncertainty may cause more and more problems for fintech investors over time.
Happy Tax is an innovative tax services franchise that actively responds to the changing needs of the American taxpayer. We recognized that people need help with their cryptocurrency taxes, so we launched a specialized CryptoTaxPrep.com division last year. By staying on the cutting edge of tax regulation and policy, Happy Tax’s in-house experts provide the top-of-the-line service to every client, no matter how specialized their needs may be. This keeps Happy Tax customers smiling, and helps our franchise partners build their client base.
International Cooperation in Cryptocurrency Taxation
As boring as most people think taxes may be, things are always changing around the IRS offices. Most recently, the American tax authority has banded together with revenue agencies from four nations: Canada, Australia, the United Kingdom, and the Netherlands. The reason behind this international cooperation: figuring out cryptocurrency tax policies.
Cryptocurrency trading is at an all-time high, and blockchain technology is at the forefront of tech innovation. With cryptocurrency and its development on the rise, international movement of currency has never been easier. However, with this rise in cryptocurrency, we’ve also seen a rise in financial crimes - tax evasion and money laundering in particular. This is raising red flags among the international financial regulatory community, and it’s triggering a wave of change in international tax policies.
As to be expected, not everyone in the financial markets is playing by the rules. This is particularly true in the cryptocurrency markets, which tend to attract more risk-taking investors. Cyber-currency crimes like money laundering and tax evasion are becoming more common now than they have been in the past because it’s never been easier to transfer money across international boundaries. With a worldwide spike in the trading volume in the virtual market, some nations have decided enough is enough and banned cryptocurrency altogether. But others, like the IRS, are taking this shift in financial markets as an opportunity to change the game on how they will tackle tax law enforcement at an international level.
Government Tax Policy Responds to Changing Markets
The IRS can’t uphold and enforce cross-boundary tax regulations like cryptocurrency taxation rules alone. As a result, the fintech revolution has created many opportunities for international cooperation. The Organization for the Economic Co-operation and Development (OECD) recently issued a call for action on the issue of tax crime, holding countries directly accountable for not doing more to eradicate these crimes. In response to this call, countries banded together to form the Joint Chiefs of Global Tax Enforcement, or “J5,” which encompasses agencies from the United States and it’s cryptocurrency tax law enforcement partners, including: the Australian Criminal Intelligence Commission (“ACIC”), Australia’s Taxation Office (“ATO”), Canada’s Revenue Agency (“CRA”), the International Revenue Service Criminal Investigation (“IRS-CI”), the Fiscale Inlichtingen-en Opsporingsdienst (“FIOD”), and HM Revenue & Customs (“HMRC”).
The stated goals of the J5 are to increase tax enforcement by sharing intelligence and conducting operations at an international level. In so doing, the J5 hopes that together they will be more effective in combating and eradicating transnational tax crimes. The J5 will primarily be focusing on offshore financial structures and instruments where money laundering and numerous tax crimes are being committed. The J5 deems these offshore structures to be a detriment to the economy, fiscal and social interests of other countries. The J5 will be initiating a proverbial “war” on these industries, investigating enablers of transnational tax crime, and money laundering.
Happy Tax Responds to the Changing Needs of the American Taxpayer
The IRS has expressed a lot of concern about how the ease and simplicity of cryptocurrency transactions are changing the face of financial services. In particular, the agency has been taking a stronger law enforcement role now that financial crimes can be perpetrated more easily through digital transactions. However, digital currency is growing in popularity. Many believe that its ultimate adoption is inevitable, and it will prove to be a very useful tool to the future economy.
Professional tax preparers can help you stay on the right side of the IRS, which is a growing concern as the agency ramps up law enforcement efforts. Combating tax evasion, however, has proven quite difficult because it occurs transnationally. The IRS has data reflecting that cryptocurrency users often underreport or failing to report cryptocurrency income at all, which means they are not paying the taxes due on their revenue from cryptocurrency trading. The IRS, and tax facilities participating in J5, are banning together to curb international tax crimes such as laundering money, since these activities create a true detriment to the overall economy.
Since the idea of cryptocurrency came to reality with the invention of Bitcoin in 2009, the IRS has been at the center of the fintech revolution. The agency’s goal is full monitoring on revenue and tax compliance of all cryptocurrency users, and the IRS works hard to make sure everyone stays in compliance. However, most people just aren’t able to stay up to date with every detail of tax law – and Happy Tax thinks that they shouldn’t have to. That’s why our in-house tax experts personally review every return, ensuring that all of our customers are happy and our franchise partners can focus on growing their businesses. To learn more about the opportunities Happy Tax is creating for its franchisees, contact us today.