The IRS has intensified its focus on high earnings within the NFT and cryptocurrency sectors, emphasizing that taxpayers must meet their obligations. This increased enforcement could lead to significant repercussions for U.S. citizens, potentially making cryptocurrencies a risky investment. Recent developments in cryptocurrency taxation highlight the agency’s commitment to monitoring this rapidly evolving landscape.
Prison Time for Cryptocurrency Tax Evasion
At the time of writing, the U.S. Department of Justice announced that a Texas citizen, Frank Richard Ahlgren, faces trial for tax evasion due to failing to report cryptocurrency earnings. Between 2017 and 2019, Ahlgren submitted incorrect tax returns that did not include his crypto income, leading to a $550,000 loss for the IRS.
The Justice Department’s statement emphasized that all taxpayers must report any income, gains, or losses from cryptocurrency transactions, such as Bitcoin 
$63,643, to the IRS. Ahlgren, identified as one of the early BTC investors, purchased approximately 1,366 BTC in 2015 when prices were significantly lower. He later reported inflated costs on his tax returns, resulting in substantial unreported gains.
IRS’s Bold Approach to Tax Collection
The IRS is aggressively pursuing tax collection efforts for cryptocurrencies, which are not yet universally recognized by the state. The U.S. government is investing in training specialized IRS tax inspectors to enhance compliance. Tax evasion or incorrect reporting is considered a serious offense in the U.S., and Ahlgren’s case is emblematic of the potential consequences facing cryptocurrency investors.
