According to Kelly Erb at Forbes, the IRS is sitting up and taking notice of the increasing use of local currencies. Erb writes about the growing use of local currencies by communities. She attributes this growth to many people’s fear of an economic collapse and states that more and more people are volunteering or working in exchange for local currencies.
Erb also notes that many people using local currencies are under a mistaken impression that this currency is not taxable. Although Erb does not believe people are intentionally avoiding paying taxes on local currencies she does make it clear that they are mistaken and the IRS is paying attention.
Erb cites to the example of the government shutdown of Liberty Reserve in May 2013. Liberty Reserve was an offshore alternative currency exchange – which handled more than 6 billion dollars during its existence. It was quickly shut down because of its lack of use of identifying data, no forms W-2 or other tax documents which made it all too easy to launder money and evade taxes.
For these reasons and more the IRS is expected to continue to crack down and take note of the use of alternative currencies.Landis Tax Group, P.C. 9100 Wilshire Blvd. Ste. 601E Beverly Hills, CA 90212 (800) 934-3578