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As 2023 Comes to an End, Deloitte Anticipates Greater IRS Interest in Taxpayer Crypto Records
Blockchain Journal editor-in-chief David Berlind speaks with Deloitte Global and US Tax Blockchain and Digital Assets Leader Rob Massey about the challenges associated with enterprise cryptocurrency transactions and taxation. As the end of 2023 fast approaches, US-based businesses (and individuals) that are in some way involved with cryptocurrencies and other digital assets will face new challenges, not the least of which will be increased scrutiny from the Internal Revenue Service (IRS).
Compared to years past, Massey suggests that there's an increased likelihood that the IRS will be summoning many organizations for an “exam” of their financial records (the universally feared “IRS audit”) especially as they relate to digital assets (including cryptocurrencies) and how exactly those organizations accounted for the constantly shifting valuations of those assets relative to fiat currencies like the US dollar. For many organizations, the idea of great digital asset record keeping is easier said than done because many existing enterprise financials and ERP systems are incapable of gracefully tracking cryptocurrency payments in the same way they track flows of fiat currency (never mind the constant volatility of crypto). Nevertheless, the onus will be on organizations to make up for those shortcomings when preparing for an IRS exam, however contemporaneous their ad hoc record keeping might be.
Even more challenging; despite the IRS's increasing interest in digital asset transactions, there’s still a lack of well-publicized comprehensive guidance on how best to prepare for such an exam. According to Massey, IRS examiners might have some latitude when conducting these audits and, as a sign of cooperative intent, organizations that are invited for an exam should come prepared with an overabundance of transparency.
In the absence of guidelines, there's a compelling reason to work with Deloitte or one of the other consultancies with a longstanding global blockchain practice: They've been through enough exams with other customers (both domestically and internationally) to come up with their own guidelines for how to survive such an audit. Not surprisingly, the organizations that perform the best when the taxman comes knocking are the ones that anticipated the increased scrutiny and adjusted the record-keeping accordingly.
To watch the video version of this podcast or read its full-text transcript, go to:
https://blockchainjournal.com/interview/2023-comes-an-end-deloitte-anticipates-greater-irs-interest-taxpayer-crypto-records
The video can also be watched on Blockchain Journal's YouTube Channel at
https://www.youtube.com/watch?v=DUu-O-LSbk4
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By Blockchain JournalBlockchain Journal editor-in-chief David Berlind speaks with Deloitte Global and US Tax Blockchain and Digital Assets Leader Rob Massey about the challenges associated with enterprise cryptocurrency transactions and taxation. As the end of 2023 fast approaches, US-based businesses (and individuals) that are in some way involved with cryptocurrencies and other digital assets will face new challenges, not the least of which will be increased scrutiny from the Internal Revenue Service (IRS).
Compared to years past, Massey suggests that there's an increased likelihood that the IRS will be summoning many organizations for an “exam” of their financial records (the universally feared “IRS audit”) especially as they relate to digital assets (including cryptocurrencies) and how exactly those organizations accounted for the constantly shifting valuations of those assets relative to fiat currencies like the US dollar. For many organizations, the idea of great digital asset record keeping is easier said than done because many existing enterprise financials and ERP systems are incapable of gracefully tracking cryptocurrency payments in the same way they track flows of fiat currency (never mind the constant volatility of crypto). Nevertheless, the onus will be on organizations to make up for those shortcomings when preparing for an IRS exam, however contemporaneous their ad hoc record keeping might be.
Even more challenging; despite the IRS's increasing interest in digital asset transactions, there’s still a lack of well-publicized comprehensive guidance on how best to prepare for such an exam. According to Massey, IRS examiners might have some latitude when conducting these audits and, as a sign of cooperative intent, organizations that are invited for an exam should come prepared with an overabundance of transparency.
In the absence of guidelines, there's a compelling reason to work with Deloitte or one of the other consultancies with a longstanding global blockchain practice: They've been through enough exams with other customers (both domestically and internationally) to come up with their own guidelines for how to survive such an audit. Not surprisingly, the organizations that perform the best when the taxman comes knocking are the ones that anticipated the increased scrutiny and adjusted the record-keeping accordingly.
To watch the video version of this podcast or read its full-text transcript, go to:
https://blockchainjournal.com/interview/2023-comes-an-end-deloitte-anticipates-greater-irs-interest-taxpayer-crypto-records
The video can also be watched on Blockchain Journal's YouTube Channel at
https://www.youtube.com/watch?v=DUu-O-LSbk4