Bitcoin Exchanges Might Not Alert the IRS Regarding Cryptocurrency Movements
A few days ago, some reports spread regarding the possibility of the Internal Revenue Service (IRS) of the United States gaining access to information about cryptocurrencies held by users in some exchanges. The platforms involved were Coinbase, Kraken and Gemini.
This is not the first time that one of these exchanges provides information about its users to regulatory agencies in the country. Coinbase has handed over information about 13,000 users to the IRS in order to be compliant with a court order. Some of the information shared by the platform were related to ID, birth date, address and historical transaction records.
According to Crypto Tax Girl, Coinbase and Gemini will be reporting to the IRS, meaning that individuals could receive a 1099-K. The 1099-K form is used to report payments received through card transactions and similar payment networks.
Kraken, one of the most popular exchanges for Euro trading pairs informed that they will not alert the IRS about the cryptocurrencies that the users hold at the platform. According to the exchange, individuals transacting on the platform are responsible for their own reporting. Furthermore, the exchange mentioned that social networks are not the best place to seek tax advice.
Correction: Kraken will not be issuing 1099-Ks this year. Only Coinbase and Gemini.
— Crypto Tax Girl (@CryptoTaxGirl) January 24, 2019
“We cannot provide advice in relation to an inquiry on taxes. (It is also probably not advisable to take tax advice from any Reddit post or comment – and certainly not for twitter either, but you may wish to consult your own CPA, tax advisor, or tax attorney individually and privately.”
Users can still download the data related to their funds moved on the platform with the help of the Export feature that the exchange has already implemented. Users have the responsibility to determine whether taxes apply to their trades or not.
According to Crypto Tax Girl, selling cryptocurrencies for fiat is a taxable event that must be informed to the regulatory authorities. Buying crypto does not trigger a taxable event. Meanwhile, trading one coin for another or using cryptocurrencies to purchase goods and services are all taxable events and must be reported.
She has also mentioned that due to the government shut down, the refunds will still be paid, tax returns will be accepted and processed, the IRS will be running and there will be no live assistance available for users.