Cryptocurrency

Crypto mining has hit a tax snag. As miners increase, so does the IRS's interest in their transactions. The tax agency is ramping up efforts to collect digital transactions tax, according to <a href="https://www.post-gazette.com/business/money/2023/07/17/irs-cryptocurrency-digital-money-mining-bitcoin-bitcoin-ethereum-tax-enforcement/stories/202307160033" rel="noopener noreferrer nofollow">post-gazette</a>. 
Mining operations are facing unique <a href="https://ultramining.com/news/en/biden-administration-plans-to-implement-30-percent-tax-on-energy-costs-for-cryptocurrency-miners/" rel="noopener noreferrer nofollow">tax</a> issues. Taxation rules for miners remain unclear, resulting in confusion. Depending on whether miners are investors or business owners, tax implications vary. 
The IRS treats digital assets as property. As a result, transactions involving virtual currencies are subject to general tax rules for property transactions. This move is part of IRS's Operation Hidden Treasure, launched in 2021, to find taxpayers failing to report cryptocurrency income. 
Furthermore, the Inflation Reduction Act of 2022 allocated $80 billion to the IRS. A good portion of this fund is set aside for enforcement activities, including crypto monitoring. This initiative hints at the IRS's plan to step up enforcement actions on digital assets from 2023 to 2031. 
Cryptocurrency provides an anonymous form of digital money transfer. However, stricter reporting requirements for crypto brokers may provide IRS with an in-depth look at digital asset transactions. The Infrastructure Investment and Jobs Act of 2021 expanded the definition of brokers to include digital asset trading platforms. They must report their customers' gains and losses. 
The IRS has even won a court case to uncover digital assets. It used a "John Doe" summons to get a Coinbase customer's cryptocurrency account information. The court ruled in favor of the IRS. 
In short, the IRS is eyeing crypto, and miners must prepare. 
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Crypto Miners Beware: The IRS Has You in Its Sights

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