Enhanced Tax Compliance for Cryptoasset Transactions

29 Pages Posted: 11 Dec 2019 Last revised: 17 Dec 2019

See all articles by William G. Najmy

William G. Najmy

Stetson University, College of Law, Students

Date Written: December 4, 2019

Abstract


This paper discusses the challenges facing the IRS as it seeks to enforce taxpayer compliance regarding cryptocurrency transactions. For a proper analysis of these issues, we must look from the perspective of economic policy, as well as tax policy, including both domestic and global.

The first part of addressing non-compliance is to abandon the idea that cryptocurrency is a currency. Instead, this paper will use “cryptoassets” to describe all types of digital and virtual currency. This broader term allows us to think beyond contemporary perspective and policy pertaining to cryptoassets and blockchain technology. Through that, the analysis will compare cryptoassets to other investments and securities, discuss the high potential for crime and fraud, examine the IRS’s current characterization of cryptoassets as property, and explore how other nations are implementing their own regulatory and tax policies for cryptoassets.

Finally, this paper argues that to successfully enhance taxpayer compliance with taxable cryptoasset events in the United States, there needs to be a dual regulatory and policy shift, which can be accomplished on two fronts. First, by creating a regulatory foundation that incentivizes taxpayers to comply with tax law. And second, by carving out a special tax characterization for cryptoassets and taxable transactions related to cryptoassets.

Keywords: cryptocurrency, cryptoassets, virtual currency, digital currency, tax, taxation, law, legal, policy

JEL Classification: G18, G28, H24, H26, K11, K34

Suggested Citation

Najmy, William, Enhanced Tax Compliance for Cryptoasset Transactions (December 4, 2019). Available at SSRN: https://ssrn.com/abstract=3499659 or http://dx.doi.org/10.2139/ssrn.3499659

William Najmy (Contact Author)

Stetson University, College of Law, Students ( email )

United States

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