Bitcoin Tax Regulations Might See Light in the Future, Indicates IRS

Coinsetter to Provide a New Bitcoin Trading Platform for Online Traders
Coinsetter to Provide a New Bitcoin Trading Platform for Online Traders

Suppose if you are a business owner and deal mostly in USD, you are certainly liable to pay taxes to your government. Now replace USD with Bitcoins in all your deals, how much money do you actually owe to the government now?

It is just a scenario if the user is an American. In reality, no government knows how much taxes they have lost to Bitcoins in the past, due to which the IRS is indicating to impose taxes on virtual currencies in the near future. It reflects in one of their unofficial 27-page reports they posted through Government Accountability Office, giving taxpayers some insight about the virtual currencies they earn on the internet.

Bitcoin is currently being used as the most reliable alternative to traditional currencies. Many online merchants have dictated its credibility over the USD, especially for its non-traceability which saves merchants a lot of tax. The report mentioned “Given the uncertain extent of noncompliance with virtual currency transactions, formal guidance, such as regulations, may not be warranted. However, the IRS may be able to develop more timely and less costly informal guidance.”

Although the number of Bitcoins is just limited to 21 million, but if seen through the lens of the IRS, there are 21 million unregulated bitcoins, with cost around $100 each, is circulating in the market. The GAO report uses this fact as its base for making bitcoins taxable in the near future. There is a chance that now if you buy or sell bitcoins, you might have to be very much transparent to your government.