22 ms·

But the IRS needs a mechanism to understand and interpret these ledgers, right? And the IRS enforcement is only as good as the people who are doing the enforcin

But the IRS needs a mechanism to understand and interpret these ledgers, right? And the IRS enforcement is only as good as the people who are doing the enforcing. I'm an engineer and I barely understand crypto, what hope does an IRS auditor have?

thesausageking 5y ago
The IRS has teams of crypto experts and they use tools like Chainalysis that do much of the low level analysis for them. Also, they get data from crypto exchanges so when someone sells Bitcoin for dollars to cash out, Coinbase will (in most cases) send the IRS the 1099. Like the rest of the US tax system, it's based on the tax payer being required to submit what she owes. If she lies about her income, the enforcement comes from the risk of IRS doing an audit and asking you to show where you got your funds from. It's no different than if you own a restaurant or other private business. You can misreport your earnings, but the risk is the IRS will audit you and you will get fined or possibly go to jail.