TAX RELIEF AMID CORONAVIRUS OUTBREAK
The payment extension permits individuals to defer payments and interest on up to $1 million until July 15th. Businesses can defer up to $10 million. This unprecedented move has been taken in light of the growing economic hardships much of the public is experiencing. Several states have also granted deferments, with more expected to follow suit.
This deferment is welcome news to many crypto investors who need time to sort out their tax liabilities. The IRS presently defines cryptocurrency as property, making each trade a taxable event even if it does not involve dollars. As such, traders must provide information, and appropriate payment, for each and every trade they make.
It is worth noting that April 15th remains the filing deadline. This must be met in order for tax returns to be processed. Typically the Internal Revenue Service (IRS) automatically grants six month extensions, albeit with penalties that have not been waived. Taxpayers thus still have a strong incentive to file on time, even if they cannot immediately pay what they owe.
The government has noted that it may make more changes to this year’s filing requirements. Also, leaders are considering other forms of economic relief.
CRYPTO CLARITY CERTAIN TO BE DELAYED
Like all government institutions, the IRS has experienced significant disruption, with thousands of employees remaining home from work. Although tax returns continue to be processed on time, general productivity has been significantly reduced.
The agency has made clear its desire to establish new guidelines for cryptocurrency reporting, yet it is safe to assume work on this task has been paused in light of the current health crisis. The same is likely true for regulatory entities such as the Securities and Exchange Commission (SEC) which has its own issues to resolve over the status of blockchain assets.
Traders should not assume that the current challenges facing the IRS frees them from their tax liabilities. The tax agency has been increasing its steps to collect crypto-related taxes, and will no doubt move more aggressively into this space once things return to normal. Given the importance of this issue, crypto advocates and investors should expect the now well-known cryptocurrency question on the revised 1040 to be the first of many steps intended to ensure full tax compliance.
Are you relieved by the latest IRS update? Let us know in the comments below!
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