The IRS told the couple to have $ 7 million of Bitcoin to liquidate crypto assets and pay tax debt
The Internal Revenue Service (IRS) won a lawsuit in which they asked a Maryland couple to liquidate their bitcoins to pay a $ 1.1 million tax debt.
Alexander and Laura Strashny proposed to the IRS to pay their 2017 tax debt, created from non-cryptocurrency operations, in installments over a six-year period.
But after seeing Strashny's $ 7 million worth of crypto assets, taxpayers rejected the proposal, emphasizing that the couple sold part of their bitcoin and immediately settled their debt. enough.
The case was tried in tax court in the state of Maryland on June 11. More taxes are waiting for the couple in case it is possible to sell cryptocurrencies to pay off the debt. U.S. bitcoin investors are taxed on profits generated from the purchase and sale of digital financial assets.
The authorities show how your cryptocurrency hold can be against you in signing up for the installment plan with the IRS and how - contrary to popular belief - regulators have overseen their portfolios. Your cryptocurrency, said Shehan Chandrasekera, a tax expert at Cointracker.
According to court papers, Strashnys filed its 2017 tax return on time, but didn't pay the $ 1.1 million tax, including penalties. In July 2018, the couple proposed to the IRS to pay their huge tax bill for six years.
To qualify for the installment plan, taxpayers must also provide the IRS with detailed information about their income and personal assets, including cryptocurrencies, as well as monthly expenses. Therefore, Strashnys filed a Collection Information Statement, also known as Form 433-A, for this purpose.
It was in this Model that the couple revealed a $ 7 million cryptocurrency cache. In addition to an annual salary of $ 200,000, Strashnys is also pocketing $ 19,000 per month from their digital asset investments. The IRS now imposes on the family a formal threat of confiscation of wages and property, as it awaits feedback on the installment proposal Taxpayers require full payment on time.
Finally, Strashnys requested a hearing. The tax court ruled that the couple were in good financial condition to repay the $ 1.1 million tax debt by either liquidating the electronic vault or borrowing US dollars against virtual currencies.
The result of the lawsuit in this court shows that cryptocurrencies cannot avoid regulatory scrutiny, Chand explained Chandrasekera.
One may ask why cryptocurrency holdings were reported on Form 433-A in the first place. This IRS form is signed by the taxpayer under penalty and perjury. If a large number of cryptocurrencies are removed from the form, this will be a scam and the consequences could be much harsher, he added.