The IRS will garnish your cryptocurrencies if you can’t pay taxes on time

The Internal Revenue Serviceâ ???? The U.S., or IRS for its acronym in English, is poised to garnish the holdings of cryptocurrency users who are struggling to pay their overdue tax debts. Send a strong signal that the government agency treats digital assets the same as any other type of property that can be confiscated.

Robert Wearing, The IRS’s assistant chief attorney told a virtual conference held by the American Bar Association that The government classifies digital assets as property. Therefore, these assets can be confiscated to pay off outstanding tax liabilities that have not been paid.

“The IRS will seize this property and try to follow their normal procedures to sell it and use it to pay off the debt.” Bear said, according to Bloomberg.

The IRS will garnish your cryptocurrencies if you can’t pay taxes on time
The IRS will garnish your cryptocurrencies if you can’t pay taxes on time

Bitcoin and other cryptocurrencies are classified as property from a federal tax perspective. based on a 2014 notice released by the IRS. The agency stated:

“Digital currencies are treated as property, and general real estate transaction tax policies apply to digital currency transactions.”

Although the IRS was able to get data on cryptocurrency users through exchanges like Coinbase and Kraken, Proof of ownership is much more difficult when assets are kept in physical wallets.

In addition to scalability issues The tax implications of digital assets can be one of the reasons Bitcoin hasn’t started out as a consolidated medium of exchange. That’s because Any time BTC is converted into cash, it is technically a taxable event in the eyes of the IRS and many other tax authorities around the world.

Cryptocurrency investors have been able to legally bypass taxes by borrowing on their holdings, something that MicroStrategy CEO Michael Saylor strongly recommends. Platforms like BlockFI, Celsius, and others allow users to obtain credit by using their holdings of digital assets as collateral.

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