According to a recent email from the IRS, the tax agency is looking for consultants who will help them track down tax evaders dealing with crypto. The main role of the contractors will be assisting in the calculation of crypto tax gains and losses emanating from transactions in the crypto sector.
The Role of the Contractors
In the email, the IRS states that it will place several single case contracts as pilots. The final goal is to establish a large, multi-case contract. Contractors hired by the IRS would have the role of calculating capital tax gains and losses in the crypto sector.
To do this, the contractor would need to aggregate on-chain and off-chain data, data from API, and tax submissions. Finally, the third party would have to assess the value of the crypto assets and make calculations regarding capital losses and gains.
To be selected, contractors will need to have specialized infrastructure and technology to contain, digest, and analyze crypto data. The reason for this is that data from the crypto sector comes with unique requirements such as precision in the placement of decimal places, varying file formats as well as field formats.
On March 3, the IRS hosted a summit in a bid to create an avenue for dialogue on crypto taxation. Various crypto firms and advocates in the crypto sector were invited to the event, which was held at it Washington D.C. headquarter.
A Tougher Stance toward Crypto Taxation
The email from the IRS has been revealed amid a tougher stance toward crypto tax evaders. In 2019, the IRS sent out thousands of emails to those working in the crypto sector that had failed to report their crypto earnings. In the 2020 1040 form, there is a question about the crypto activities of taxpayers.
COVID-19 Tax Relief
Recently, the IRS gave the taxpayers in the crypto sector a reprieve. Due to the ongoing COVID-19 outbreak, the IRS announced a 90-day extension for Americans to pay their taxes. It is an unprecedented decision that has been made amid an unprecedented global viral outbreak.