Own cryptocurrencies? Be prepared for the taxman cometh

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There is an old cliché that says, “Beware, for the taxman cometh.” This is true for those own cryptocurrency, as countries are becoming \more vigilant in ensuring that those who deal and trade in the digital currencies are providing the proper amount of taxes on their asset.

Australia has become the latest country to start looking at those who are involved in the transactions of digital currencies. According to a report, tax officials in the nation are investigating at least a dozen transnational tax avoidance schemes that involve the use of cryptocurrencies. According to the report, authorities from countries such as Australia, the United States, Great Britain, Canada, and the Netherlands are cooperating on a global plan to try to catch those involved in these schemes.

J5, the name that has been given to the five countries involved, was set up by the U.S. Internal Revenue Service and has been given the power to fight against those involved in tax fraud related to cryptocurrencies. Currently, the J5 has 60 open investigations running, and it is likely that they could have nearly double that many in the near future.

As these digital currencies increase in value, and more consumers find themselves choosing the digital currency over traditional fiat currencies, it has become imperative that government authorities look for means to try to maintain tax revenues. These revenues could easily be lost because of those who opt to avoid using national currency options.

This is why 21 members of the United States Congress sent a letter to the Internal Revenue Service seeking for them to create guidelines and regulations that would specifically cover the taxes on cryptocurrencies. According to a report by the IRS, owners of cryptocurrency owe more than $25 billion as of the end of 2018.

South Korea began imposing taxes on digital currencies in October 2018, and Portugal created guidelines for taxation related to crypto over a year ago. It is becoming apparent that those nations that allow for digital currencies to be traded or be acquired as assets have developed laws governing how much tax should be paid.

While the laws are in place, that does not mean that every person has been paying what they are supposed to. The J5 reports that at least one of the 12 groups they are investigating has helped taxpayers to hide their assets, making it so that government agencies are completely unaware.

By working with the J5, the Australian Taxation Office believes that they are quite likely to track and catch those who have attempted to disguise their assets, because of how much information is now being shared between these organizations.

“At no other time have criminals been at greater risk of being caught,” explained Will Day, Deputy Commissioner of the ATO. “In Australia, they are often intermediaries who are playing a role between the tax evader and an offshore entity.”