In spite of consistent warnings to to pay off their tax dues on cryptocurrency profits, American bitcoin investors are in no particular hurry to disclose just how much they owe.
Initial data from a popular tax preparation service indicates that only .04% of U.S. tax filers have disclosed their cryptocurrency gains and losses to the Internal Revenue Service so far. That’s far less than the 7% of Americans who are pegged to own bitcoin or another kind of cryptocurrency, and who are likely to owe the IRS on those investments.
The development was reported in Fortune.
Of the first batch of people numbering in the 250,000 to file their tax returns using Credit Karma, less than 100 of them revealed any taxable event for cryptocurrency.
From those, only one person reported a crypto gain or loss big enough to be “significant,” according to Credit Karma, a free credit-monitoring startup.
While it’s still early in tax season, the IRS had gotten only 18.3 million individual tax returns so far this year, or some 13% of the total expected this tax season. Cryptocurrency investors appear to be hesitant to report their earnings.
For example, in a survey involving over 2,000 American cryptocurrency owners that was done in January by Credit Karma Tax along with research firm Qualtrics, some 57% of respondents answered they’d realized gains on their crypto investments—profits the IRS considers taxable. And yet more Americans (59%) said they had never reported any such gains to the IRS.
Although users of Credit Karma’s tax prep service do not represent all U.S. taxpayers, they do make up for a substantial part. A million people filed their tax returns through Credit Karma Tax in 2017, the first time the company offered the online product. That makes the service the nation’s fifth largest tax preparer, though Credit Karma is set to become the third largest this year, just behind TurboTax and H&R Block.
When it comes to paying taxes, bitcoin investors hold a history of being elusive. The IRS last year sued Coinbase, a foremost cryptocurrency exchange, for access to customer records after 802 people reported gains or losses from Bitcoin in 2015. A court ordered Coinbase to identify more than 14,000 customer accounts to the IRS.
Meanwhile, high-profile bitcoin investors have been cautioned by their crypto compatriots to follow IRS rules.
“When I talk to the blockchain community, I’m always pushing them—I’m like, ‘Dudes, A), pay your taxes.’ Because nobody in that space pays taxes,” Mike Novogratz, a billionaire hedge fund manager who now primarily invests in cryptocurrencies, said.
“Listen, the IRS is going to come after people. People are making real money now. So the IRS isn’t stupid.”
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