Recently, the US Bitcoin market has set off a vigorous tax storm. It is reported that the new Bitcoin tax regulations have been officially implemented, which has aroused the vigilance of a large number of traders. In this trend, 10,000 warning letters have sprung up like mushrooms after rain, which makes people wonder: Why is the Bitcoin tax problem so serious? This article will analyze this issue in depth and take you to explore the mystery.

The implementation of Bitcoin tax regulations has undoubtedly sounded the alarm for investors. In the past, virtual currency transactions such as Bitcoin were often regarded as gray areas, and many people thought they could get away with it. However, the reality is cruel. As the government accelerates the pace of regulation of digital currency transactions, tax loopholes are gradually blocked, and various transaction records are sorted out one by one. This makes many investors feel terrified and begin to worry about their tax compliance.

At this critical moment, the appearance of 10,000 warning letters has poured cold water on people. These letters are not only a warning from the tax department to Bitcoin holders, but also a warning to the entire market. For a time, Bitcoin investors fell into a deep panic. They began to examine their trading behavior, worrying whether they had violated the tax law and whether they would fall into the legal quagmire.

There are various opinions on the content of these warning letters in the market. Some people said that this was just a routine inspection by the tax department and there was no need to worry too much; others believed that this was a clear signal from the government to the Bitcoin market, and future supervision would be stricter. Regardless of the truth, this storm has swept in, and everyone involved must be prepared to deal with it.

When facing new tax regulations, investors need to keep a clear head and treat their trading behavior prudently. They should not only understand the relevant provisions of the tax law, but also declare their personal transaction records in a timely manner to ensure their compliance. At the same time, they also need to seek help from professional tax consultants to avoid falling into a passive situation due to momentary negligence. Only in this way can we remain relatively safe in this storm.

In general, the implementation of the new Bitcoin tax regulations has brought a considerable impact on the market, and 10,000 warning letters have made people feel the true power of the tax storm. At this special moment, every Bitcoin investor needs to be vigilant and prepared to deal with it. Only in this way can we remain relatively safe in this storm. I hope every investor can successfully weather this tax storm and usher in better investment opportunities.

The four most famous international exchanges:

Binance INTL	OKX INTL	Gate.io INTL	Huobi INTL
China Line　APP DL	China Line　APP DL	China Line　APP DL	China Line　APP DL

Note: The above exchange logo is the official website registration link, and the text is the APP download link.

If you ask everyone to evaluate which department in the United States has the most deterrent power, many people will think of the Federal Bureau of Investigation (FBI) at first. But in fact, the IRS is more majestic than the FBI. Not only ordinary people, but even vicious gangs and drug dealers dare not mess with it. However, the cryptocurrency circle, which seems to have nothing to do with it, has recently been completely targeted by the IRS.

Last weekend, a large number of cryptocurrency investors in the United States reported that they received warning letters from the IRS, requiring them to report their cryptocurrency transactions and pay taxes, interest and fines correctly.

The general meaning of the letter: We know that you may not have paid taxes on one or more virtual currency trading accounts as required

At the same time, the IRS pointed out in the announcement that it will send letters to 10,000 cryptocurrency investors in the United States before the end of August this year.

I believe that in the next month or so, American cryptocurrency investors will check their mailboxes every now and then, fearing that they will be the one who is "hit". If you fail to pay taxes according to regulations, you will face fines from the IRS at the least, or be sent to prison by the IRS, which has always been vigorous and resolute.

The relentless pursuit of the IRS

In fact, the IRS wanted to "make a fortune" from Bitcoin a long time ago.

In March 2014, when the market value of the entire cryptocurrency was only 6 billion, the IRS determined that "Bitcoin is an asset" and that it was also taxed when it was used for payment and other activities.

Since then, the IRS has been trying to impose taxes on Bitcoin, although there has been no major progress in the next two or three years.

Until November 2016, it targeted the US legal exchange Coinbase and directly ordered it to hand over user records of Bitcoin purchases between 2013 and 2015. In addition, the IRS also signed a contract with the blockchain analysis company Chainalysis to try to link Bitcoin transactions with real user information.

As soon as the news came out, the entire currency circle was angry about the "violent threat" of the IRS. This tough style is simply robbing money.

Not only the currency circle investors, but even Coinbase did not want to meet this unreasonable request. They filed a lawsuit in court on the grounds that this move involved leaking user privacy.

After a year of tug-of-war, Coinbase finally lost to the IRS. In December 2017, the judge ordered Coinbase to disclose the specific information of 14,000 users to the IRS, including the taxpayer's identification code, name, date of birth, address and transaction records.

It is said that the only certainties in life are death and taxes. From then on, Bitcoin is far from the function of tax avoidance in the United States. After all, no one dares to offend the IRS.

Taxes that cannot be escaped

Investors who are confused about paying taxes have to refer to the tax policy issued by the IRS in 2014:

According to the tax policy issued by the IRS in 2014, when consumers hold Bitcoin for less than one year, the gains will be treated as short-term capital gains, which is the same as the ordinary income tax rate, which may be as high as 39%;

When the holding period exceeds one year, the profits will be treated as long-term capital gains, with a lower tax rate ranging from 0 to 20%.

In short, the longer you hold the currency, the lower the tax you pay.

However, this regulation is limited to users who hold coins, and the tax rules for futures, airdrops, forked coins, etc. are not clear.

The IRS, which has won a phased victory, did not quickly launch a supporting tax payment method. Instead, American cryptocurrency citizens and the Legislative Yuan have repeatedly called on the IRS to launch new guidelines.

When everyone relaxed their vigilance for this, the IRS came back and began to take action against those who did not correctly declare their income and taxes in July this year, "educating" and warning them in the form of letters.

Last weekend, on the reddit forum and Twitter, people posted letters from the IRS one after another. The warning letter is divided into three versions according to the severity: 6173, 6174 and 6174-A, among which:

6174: means they know that you hold cryptocurrency;

6174-A: means they believe that you have violated the law and have not paid taxes, and may launch law enforcement actions against you;

6173: means they are sure that you have violated the law and started to hunt you down.

Obviously, the IRS is serious, and this wave of revenge will continue for at least a month.

Americans are panicking

It’s okay for those “honest people” who pay taxes on time, but most investors didn’t pay much attention to it before. Everyone has been asking about the tax payment methods in the past few days, and even have to spend hundreds of dollars to pay professional tax companies to understand the tax payment rules and calculate how much tax they have to pay.

Since the IRS announced last Friday that it would write to taxpayers, the price of Bitcoin has fallen from $10,130 to $9,450 in two days, and the Google search trend of “bitcoin+IRS” soared on the same day. It is difficult for us to say that the market turmoil has nothing to do with the actions of the IRS.

Some people believe that it is bad news in the short term, especially for exchanges in the United States. In order to avoid tax troubles, investors will reduce the amount of funds entering the market, or directly choose point-to-point over-the-counter transactions to avoid their real identities being tracked by the IRS.

Some people think that this is a good thing in the long run, just like Bitcoin Jesus said: "If the IRS is trying to tax Bitcoin, it means that the IRS seems to accept that Bitcoin may be used by mainstream people and institutions."

As the world's largest cryptocurrency market, the United States' policy changes not only affect the price of the currency, but also may serve as a model for other countries. The global Bitcoin taxation has just begun.

No matter how you look at the impact of the IRS, one fact cannot be denied - centralized power agencies have extended their tentacles into Bitcoin and other cryptocurrencies through various reasons. This situation will only increase in the future, and how to balance the "constraints" and "freedom" in it is a long-lasting problem.