Just a few months ago in July 2019, the United States Internal Revenue Service sent approximately 10,000 letters to cryptocurrency holders regarding their crypto holdings.
According to the letters, the reports must be "True, correct and complete" in order to be approved by the IRS. But how can the IRS know the submitted reports meet their criteria?
What many people don't know is that the IRS continuously contracts Chainalysis to support their intelligence work on cryptocurrency investors.
Connecting one cryptocurrency address to another: The IRS can automatically find connected paths of crypto addresses and trace the flow of funding, source and destination of a specific transaction.
This technology enables the IRS to find the link between crypto addresses that have been reported to them with others that may not have been reported.
Identifying exchange activity: While crypto trading on exchanges is off-chain and cannot be found on the blockchain, every trader must use a crypto address on the blockchain in order to deposit or withdraw their cryptocurrencies.
The blockchain analysis systems have collected big data of exchanges addresses, which enable the IRS to link reported addresses to exchange activity.
Crypto investors that use crypto as a means of payment make many transactions to third-parties, just like any other payment service.
Collect your addresses from all the wallets, all data from your crypto exchanges, and all of your activities during the required tax period.
There are some crypto tax platforms, such as Bittax or Blox, that track all your crypto addresses and combine them with exchange information.
Only Reporting Part of Your Crypto Addresses? The IRS Needs to Know
pubblicato su Sep 26, 2019
by Cointele | pubblicato su Coinage
Coinage
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