Antivirus pioneer John McAfee, founder of McAfee Associates – the company that launched the first commercial antivirus software McAfee VirusScan in the late 1980s and helped spawn a billion-dollar industry – was charged with five counts of tax evasion and five counts. … Charges for intentional failure to file a tax return, which can result in a maximum penalty of up to 30 years if convicted. According to the US Department of Justice, he can also expect to pay taxes and fines in the United States. The Department of Justice’s allegations were made shortly after the US Securities and Exchange Commission announced that it had filed civil charges against McAfee in connection with the cryptocurrency offers.
McAfee has been a controversial figure in many countries, not just the United States. He went into “exile” after claiming that he was accused of using cryptocurrencies against the US government, and last year he tweeted stupidly from a boat and boasted that he had not done so. Do not file any U.S. tax returns.
According to the indictment of the Ministry of Justice, which was released after the arrest in Spain, where he is awaiting extradition to the United States, McAfee has not filed a tax return for four years, from 2014 to 2018, despite having won millions in consulting services. and conversation obligations. , Cryptocurrency and the sale of rights to his life story for use in a documentary. McAfee was charged with tax evasion by depositing the proceeds in bank and cryptocurrency exchange accounts registered in the candidates’ names. It is also alleged that he hid assets under false names, such as yachts and real estate.
Selling or exchanging cryptocurrencies, using cryptocurrencies to pay for goods or services, and holding cryptocurrencies as investments, usually have tax consequences that can lead to tax liabilities. Taxpayers who do not report the tax implications of cryptocurrency transactions properly may be liable for taxes, fines and benefits. The Internal Revenue Service monitors the implementation of the global tax implications of cryptocurrency transactions through the Virtual Currency Compliance Campaign of the International Retention and Individual Compliance Practice Group. The campaign seeks to address global tax compliance issues related to the use of cryptocurrency through “several treatment procedures, including awareness and testing.”
Track the tax authorities’ initiatives to collect taxes for cryptocurrencies
Despite the recent success of the Department of Justice and the IRS in uncovering covert cryptocurrency-related tax evasion for McAfee, two reports were released in late September by the Inspector General of the IRS (TIGTA) and one earlier. This year, the Government Accountability Office (GAO) announced the alarm about how insufficient the IRS is to enforce tax liabilities on cryptocurrencies.
These assessments began to evaluate the IRS’s efforts to ensure accurate reporting of cryptocurrency transactions in light of the fact that the use of cryptocurrency as a payment method is becoming more popular, and in the face of the COVID-19 pandemic, it is becoming an alternative to assets. to US dollars or other fiat currencies.
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TIGTA and GAO audit reports found that the IRS has limited tax compliance data for cryptocurrencies due to limited reporting from third parties such as financial institutions and cryptocurrency exchanges, and in part due to unclear requirements and limitations on the number of cryptocurrency users reported by third parties.
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These revisions focused on cryptocurrency exchanges as they play an important role in the convertibility and stability of cryptocurrencies by making it easier for customers to buy and sell cryptocurrencies in exchange for fiat currencies or other cryptocurrencies. Although these exchanges can provide important information that the tax authorities can use in the tax administration, information on cryptocurrency transactions from exchanges is not available.
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The most recent IRS tax deficit survey in September 2019 showed that non-compliance depends on the amount of information provided by external actors such as employers, banks and partnerships.