The Internal Revenue Service (IRS) has entered into a contract with TaxBit, a provider of tax services for cryptoassets. This will help the US tax authorities to audit legal entities and individuals.
The TaxBit company announced that it has entered into a one-year contract with the IRS and said that it will provide audit services for cryptocurrency transactions. In this way, the company will help the agency check if large traders file tax reports on cryptocurrency transactions correctly.
“We will provide data analysis, support and calculations to the IRS to help them get the right information,” said TaxBit director of government relations Seth Wilks. “We will fill some of the tool gaps that the IRS infrastructure simply does not have right now.”
In March of this year, the IRS launched a program to identify cryptocurrency owners who are hiding their income, under which it planned to train its employees in blockchain analysis. Under the terms of the new agreement, the agency will provide the data it has and ask TaxBit to analyze the transactions.
Wilkes said these audits are not cryptocurrency specific. The IRS audits a number of organizations and individuals annually, initiating some of these audits by randomly selecting taxpayers and others based on suspicious signs.
When verifying cryptocurrency transactions, the IRS will use TaxBit to conduct the required analysis. Wilkes said TaxBit is likely to screen large companies or traders who report thousands or millions of transactions per year.
“We are talking about wealthy individuals or investment funds. The typical everyday investor is out of our sight, ”he said.
TaxBit will use its platform, which has been in development for three years, to aggregate any entered data before calculating P&L automatically. This data can come from different exchanges or wallets.
The problem for the IRS is that while some exchanges and individuals submit specific forms to the agency, others simply provide a CSV file of transaction data.
According to Wilkes, the new collaboration indicates a growing understanding by regulators that crypto is not going anywhere.
“They see more and more people registering cryptocurrency income,” he said of the IRS. “If they are randomly sampled as part of an audit, they will get even more data.”
Recall that in April, the head of the IRS, Charles Rettig, said that the department was preparing new requirements for declaring income from cryptocurrency transactions.
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