The Internal Revenue Service (IRS) has won a case in which itdemanded that a Maryland couple liquidate their bitcoin to pay-off a
$1.1 million tax debt.
Alexander and Laura Strashny proposed to the IRS to pay their 2017
tax liability, generated from non-crypto activities, in installments
over a six-year period.
But after seeing the Strashny’s $7 million
cryptocurrency fortune, the tax collector rejected the proposal,
insisting that the couple sell a part of their bitcoin and immediately
settle the debt in full.
The case was heard in a tax court in the
state of Maryland on June 11. More taxes await the couple in the likely
event it sells crypto to pay-off the debt. Bitcoin investors in the U.S.
are taxed on profits generated from buying and selling of digital
financial assets.
The ruling “shows how your cryptocurrency
holdings could work against you in applying for an installment plan with
the IRS and how – contrary to popular belief – regulators have
oversight over your cryptocurrency portfolio,” said Shehan Chandrasekera, tax expert at Cointracker.
According to court papers,
the Strashnys filed a 2017 tax return on time, but did not pay the $1.1
million tax charge, inclusive of penalties. In July 2018, the couple
proposed to the IRS to pay-off their huge tax bill over six years.
To
qualify for the installment plan, a taxpayer must also furnish the IRS
with details about their source of income, personal assets, including
cryptocurrency, as well as monthly expenses. So, the Strashnys filed a
Collection Information Statement, also known as Form 433-A, for this
purpose.
It is on this Form that the couple revealed its $7
million crypto cache. In addition to annual wages of $200,000, the
Strashnys were also pocketing $19,000 each month from their digital
assets investment. Now the IRS hit the family with a formal threat of
seizure of wages and properties, as it waited for a response on the
installment proposal The tax collector demanded full payment on time.
Eventually,
the Strashnys requested a hearing. The tax court ruled that the couple
was in a good financial position to pay off the $1.1 million tax debt by
liquidating the crypto stash or borrowing U.S. dollars against the
virtual currency.
“The outcome of this court case shows how cryptocurrency is not immune from regulatory oversight,” explained Chandrasekera.
“One
might question why the 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 the large holding of cryptocurrency were omitted
from the form, this would have been a fraudulent filing and the
consequences could have been much harsher,” he added.
source link : https://news.bitcoin.com/irs-tells-couple-with-7-million-in-bitcoin-to-liquidate-crypto-assets-and-pay-off-tax-debt/
