Not fun token: circle of tax authorities, since the risks of tax evasion increase

The popularity of non -fungible tokens (NFTS) rose in a leap in 2021. The sale of blockchain-based property certificates worth several million dollars included everything from a signed tweet to virtual sneakers. Not everyone is impressed. The steep CO2 footprint of the digital assets annoys environmentalists; Their opaque troubles concerned those who combat money laundering and tax evasion.

The art market already offers opportunities for money laundering. Secret posture is omnipresent, as a report by the US Senate from last year showed. But the difficulty of transporting and storing art does not apply to NFTS. By buying and reselling NFTs, criminals can move into wallets that are not connected to them with illegal activities.

The sale of individual NFTs at record prices is too high in the course to be suspicious. But the tax authorities do not have the NFT market under control. According to Jefferies, it is worth $ 14 billion this year and grows quickly. NFTs are naturally invisible, said the head of the Internal Revenue Service, Charles Rettig, at the beginning of the year when he warned that cryptocurrencies contribute to an annual deficit of $ 1 trillion in US tax revenue.

The tax regulations must be better defined. Most tax authorities consider cryptos to be a kind of property, such as stocks or paintings, so that taxes can be levied on profits. However, there are disputes about what jurisdiction should have taxation rights. It is also discussed about which NFTS should be taxed. The latest global money laundering guidelines only aim at NFTs with investment or payment applications.

Tax authorities need better data. The largest source of income in the infrastructure law of President Joe Biden-which has been estimated to be $ 28 billion over a decade-includes rules that commit brokers to disclose crypto transactions, possibly also those that contain NFTS. This could be driven by blockchain projects. A new draft law tries to water the reform.

Tax survey was probably always associated with difficulties for an industry with libertarian roots. But the tax authorities will not be ready to overlook a market that is likely to be quinted to more than $ 75 billion over the next four years. You shouldn't do that in view of the possibilities for bypass that NFTS offer.

The Lex team is interested in hearing more from the readers. Please let us know in the comments below what you think of NFTS and tax evasion.