Although reporting crypto gains and losses is mandatory in the US, it seems like American investors are staying low during tax season, according to Fortune.
Apparently, only 0.04% of US tax filers have reported their gains and losses related to cryptocurrency to the Internal Revenue Service (IRS) so far this year. An estimated 7% of Americans own some sort of crypto, so they are likely to owe taxes to the IRS on those investments.
Although it is still early in tax season, with the tax return deadline being April 17th this year, the number of investors willing to disclose their crypto earnings is disproportionately small. According to Fortune, “Of the first 250,000 people to file their tax returns using Credit Karma, fewer than 100 of them disclosed any taxable event for cryptocurrency. Of those, only a single person disclosed a crypto gain or loss big enough to be ‘significant.’”
This is not the first year that the IRS is facing this problem: only 802 people reported their Bitcoin earnings for 2015 (with a similar number of reports in 2013 and 2014), however the IRS gained access to more than 14,000 crypto exchange Coinbase accounts.
Mike Novogratz, a crypto billionaire and one of the Forbes 20 wealthiest people in crypto, said at a conference in June, “When I talk to the blockchain community, I'm always pushing them—I'm like, 'Dudes, A), pay your taxes.' Because nobody in that space pays taxes. Listen, the IRS is going to come after people. People are making real money now. So the IRS isn’t stupid.”