The IRS is getting serious about collecting taxes on all that cryptocurrency trading that's been happening over the last few years.
Under the bi-partisan infrastructure law passed last November, crypto firms are supposed to begin tracking their clients' detailed transaction data in 2023 and submitting reports to the IRS the same way stock brokerages do, but for the years before that, the IRS is having to get warrants to dig through all the files themselves.
They've been going after the smallest most obscure firms just as vigilantly as the bigger ones. SFOX was just served a summons for customer records. SFOX has 175,000 users and around $12 billion in transactions since 2015 – a drop in the bucket compared to places like Coinbase.
Previous reviews of crypto firms have already triggered 10,000 letters to digital currency holders that failed to pay their taxes or improperly reported taxes on their digital assets. Some of these will be facing criminal prosecution.
The IRS has repeatedly said cracking down on crypto trading is a priority for them.
Mind you, they still don't have enough people to answer the phones or find all the missing tax returns from the past year, but ending the crypto-train is way more important than all that.
They figure they can recover about $28 billion in unpaid taxes over the next decade.
To put that in perspective, the IRS hasn't even finished processing the $3.71 trillion backlog tax returns filed in 2021. They have yet to start processing the equivalent amount of tax returns filed in 2022.
They're so far behind that IRS processors have logged 500,000 overtime hours this year.
Something tells me there's more to going after crypto than being able to recover $2.8 billion per year over the next decade.
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