Understanding the Need for Tax Amnesty

Key Takeaways:

• Crypto traders are unlikely to see a formal IRS tax amnesty program, due to the IRS's stance that they've already had time and tools to file properly.

• The IRS views many crypto traders as high-income earners, which discourages leniency and increases the likelihood of criminal enforcement instead.

• Crackdowns are expected to intensify, especially for those with over $400,000 in income, with a surge in audits and enforcement after the next presidential cycle.

• CryptoTaxAudit helps traders prepare for these shifts, offering education, strategy, and compliance support before audits or criminal investigations begin.

In recent discussions, we have made a compelling case for implementing a tax amnesty to help crypto traders who have yet to come forward.

These conversations have included high-level talks with the Taxpayer Advocate's office, a key entity in tax policy and enforcement, highlighting a common struggle: How can we propose an effective tax amnesty?

Will the IRS Offer a Tax Amnesty for Crypto Traders?

The complication lies with the IRS, which has provided significant time for crypto traders to report their gains.

They've been clear and have not created substantial roadblocks for filing tax returns.

Up until now, the IRS hasn't enforced a stringent crackdown, which typically accompanies an amnesty.

Therefore, the expectation of an amnesty program seems unlikely.

How Does the IRS View Crypto Traders and Their Income?

From the perspective of the IRS, crypto traders are viewed as high-income individuals.

Interestingly, former IRS Commissioner, Charles Rettig, suggested that the crypto market could owe up to half a trillion dollars in unpaid taxes.

These substantial figures explain why the IRS is hesitant to ease up on enforcement and allow for tax amnesty.

Is a Crypto Tax Crackdown Coming in 2025?
The IRS is expected to focus heavily on high-income individuals, particularly those with over $400,000 in total positive income, including many crypto traders.

We anticipate a significant increase in criminal enforcement and audits.

This focus will likely trigger a rush of traders trying to comply once they realize the severe consequences of not doing so.

What Are the Early Signs of IRS Crypto Enforcement?

Watch for an increase in news releases from the IRS and the Justice Department to determine when the crackdown begins.

Weekly announcements will likely detail individuals pleading guilty to charges or facing penalties from tax court rulings.

This news will be a lagging indicator as the actual enforcement began 6 to 12 months prior.  

How Can CryptoTaxAudit Help You Prepare for IRS Enforcement?

A significant crackdown is expected to commence after a new president takes office to avoid turning the issue into a political debate. 

The IRS and other authorities appear to be preparing for a substantial enforcement period.

At CryptoTaxAudit, we provide expert guidance and educational resources tailored to your investment needs. 

Stay ahead of changing policies and ensure your financial decisions are well-informed and strategic.

Don’t miss out—schedule a call with us today to equip yourself with the essential knowledge to manage crypto tax implications effectively. Protect your financial future by acting now!

Related Articles: 
Understanding IRS Cryptocurrency Enforcement: Your Rights and Responsibilities

Frequently Asked Questions

Q1: Will the IRS offer a tax amnesty for crypto traders?
A: It’s unlikely. The IRS believes it has already provided sufficient time and guidance for traders to report crypto income. CryptoTaxAudit helps clients come into compliance before enforcement actions begin.

Q2: Why does the IRS view crypto traders as high-risk for enforcement?
A: Many crypto traders fall into the high-income category, and IRS estimates suggest hundreds of billions in unreported taxes. CryptoTaxAudit educates clients on their obligations and supports them in taking proactive steps.

Q3: When is the IRS likely to begin stricter crypto enforcement?
A: Significant enforcement is expected after the next presidential transition to avoid political controversy. CryptoTaxAudit monitors these trends to help clients stay ahead of IRS action.

Q4: What are the warning signs that IRS crypto enforcement has started?
A: A surge in IRS and DOJ press releases about crypto-related charges is a strong indicator. CryptoTaxAudit helps clients respond before those warnings turn into audits or charges.