Over time, non-fungible tokens (NFT, for its acronyms in English) have been shown to be one of the most popular sectors of cryptocurrencies, and now the EE government. UU Finally, I could be ready to take part in this sector at its peak. According to a Bloomberg report, Internal Revenue Service (IRS) officials have announced their plans to begin cracking down on NFT investors and creators who are evading tax payments.
NFT investors raise concerns over unclear tax laws
According to data from Chainalysis, the NFT market is currently around $44 billion. And according to tax experts, buyers and sellers of NFTs – that is, creators and investors – are facing billions of dollars in unpaid taxes. Not only that, but they also face rates of up to 37% and the IRS has now confirmed that it is preparing to crack down on tax evaders.
While there is still a lot of uncertainty surrounding the upcoming crackdown, NFT enthusiasts can prepare to be blown away when tax filing season begins later this month.
For what it’s worth, token taxes as of now are not clearly defined, leaving NFT investors with no clue as to whether they owe taxes or how they should calculate them in the first place.
For example, an investor and creator of the NFT, Adam Hollander, called the situation an “absolute nightmare” as he himself had to review several months of transactions.
But speaking of the unclear tax terms when it comes to NFTs, San Francisco tax attorney James Creech says:
"You cannot report profit or loss because the IRS has not provided guidance that meets your expectations."
Federal Revenue Investigators prepare to receive numerous tax cases in 2022
In the meantime, the IRS has hinted that it is fully prepared to begin handling these cases with NFT taxes.
Interim Executive Director of Cyber and Forensic Services for the IRS Criminal Investigation Division Jarod Koopman said:
“Subsequently, we will likely see an influx of potential NFT-type tax evasion cases or other crypto-asset tax evasion cases.”
With so much money at stake, the IRS may have no choice but to clarify the rules and make things a little easier when it finally starts cracking down on defaulters.