For the first time ever, the IRS has included the following question on its Schedule 1 1040 tax form for 2019:
“At anytime during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
My question is, am I legally obligated to answer this question truthfully, and if so, what are the legal consequences of not telling the truth?
My hunch is that the IRS is bluffing, trying to scare people into voluntarily disclosing their private information, so that they can later be audited. Correct me if I'm wrong, but isn't the function of the IRS to collect taxes, rather than probing into whether individuals own certain assets?
It's one thing if the IRS was trying to recover taxes on digital currency sales, it's quite another when they demand to know if you had anything to do with cryptocurrencies at all. It seems that the IRS is overstepping its legal authority here. If they now can force you to divulge whether you own digital assets, they can also force you to disclose all your possessions, including your furniture, electronic items, jewelry, clothes, etc. It's an Orwellian slippery slope, and we shouldn't be going there.
Mind you, I owe no taxes on my cryptocurrency holdings, as I have only purchased but not sold them. However, I do plan on selling them at some point, once they've reached a certain value. At that time, I will pay any taxes due. Until then, I don't see why the IRS should have any business inquiring about them.
“At anytime during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”
My question is, am I legally obligated to answer this question truthfully, and if so, what are the legal consequences of not telling the truth?
My hunch is that the IRS is bluffing, trying to scare people into voluntarily disclosing their private information, so that they can later be audited. Correct me if I'm wrong, but isn't the function of the IRS to collect taxes, rather than probing into whether individuals own certain assets?
It's one thing if the IRS was trying to recover taxes on digital currency sales, it's quite another when they demand to know if you had anything to do with cryptocurrencies at all. It seems that the IRS is overstepping its legal authority here. If they now can force you to divulge whether you own digital assets, they can also force you to disclose all your possessions, including your furniture, electronic items, jewelry, clothes, etc. It's an Orwellian slippery slope, and we shouldn't be going there.
Mind you, I owe no taxes on my cryptocurrency holdings, as I have only purchased but not sold them. However, I do plan on selling them at some point, once they've reached a certain value. At that time, I will pay any taxes due. Until then, I don't see why the IRS should have any business inquiring about them.
