After making millions during the Bitcoin craze, many Americans aren't about to give Uncle Sam what they owe. A new study revealed that only a tiny fraction of Americans reported their cryptocurrency transactions to the IRS.
According to Credit Karma Tax, fewer than 100 of 250,000 federal tax returns filed and prepared by the company have filed a Form 8949 for cryptocurrency gains and losses. This amounts to less than 0.04 percent of filers.
"Generally, Americans with more complex tax situations file later in the tax season, especially if they expect that they'll owe money," Credit Karma Tax General Manager Jagjit Chawla said in a statement. "However, given the popularity of Bitcoin and cryptocurrencies in 2017, we'd expect more people to be reporting."
Out of the 100 individuals that did report their Bitcoin gains or losses, the company said that only one disclosed a crypto gain or loss big enough to be "significant." According to Credit Karma Tax, which is a free credit-monitoring startup, 52 percent of its filers this tax season are millennials.
Cryptocurrency investors have had a history of being evasive when it comes to paying taxes on their gains. The IRS was even forced to use Coinbase, one of the biggest cryptocurrency exchanges, for access to customer records after only 802 people reported gains or losses from Bitcoin in 2015.
High-profile investors have warned fellow investors to comply with IRS rules. Mike Novogratz, a billionaire hedge fund manager always tells the blockchain community, "Listen, the IRS is going to come after people. People are making real money now. So the IRS isn't stupid."
The IRS treats Bitcoin and other cryptocurrencies as property rather than actual currencies. As such, they are taxed in the same way a sale of property for cash is taxed. The tax agency also stated that income from "mining" cryptocurrencies is taxable.