Each news cycle brings a new chapter in the story of cryptocurrency and its expansion in the public consciousness. The fluctuating value of bitcoin (and what it means for investors), the number and types of cryptocurrencies, and the various technology applications have left many of us wondering how to make sense of it all. This story continues to expand along with the global financial footprint of cryptocurrency, which currently has a market capitalization of about $2 trillion.
Unsurprisingly, the federal government also wants a piece of the action. The Biden administration's recent proposal – unveiled on Thursday, May 20th – would require cryptocurrency transfers over $10,000 to be reported to the IRS. With the heightened scrutiny on cryptocurrency transfers, it is increasingly likely that cryptocurrency regulations and reporting requirements will increase in the coming months and years.
The Need for Predictive Analytics
Few taxpayers have sufficient expertise to understand the intricacies of crypto, especially how their cryptocurrency holdings affect their tax obligations. Because of this lack of understanding, many taxpayers incorrectly report, under-report, or fail to report cryptocurrency transactions to the IRS.
And while some guidance is offered to taxpayers, such as a list of frequently asked questions on virtual currency transactions, it may not be enough. Many individuals and businesses get started on the wrong foot, resulting in warning letters from the IRS due to a failure to report cryptocurrency income.
Tools at Hand
CCH Axcess iQ is a predictive analytics tool that helps you advise your clients on thorny issues in cryptocurrency. For example, when the government issues new legislation or guidance, iQ provides you a thorough analysis of the tax event as well as a list of your clients who are likely to be affected.
Whether you are scheduling meetings with your clients or preparing to send out email blasts about hot topics like cryptocurrency, iQ helps create revenue for your firm and increase customer service by providing valuable data to use during client engagements like these.
One such tax event, Cryptocurrency and Virtual Currency Guidance Issued, defines important concepts, explains potential areas of non-compliance, and provides helpful suggestions on how to avoid painful and costly entanglements with the IRS. Taking action on this event is simple because every iQ event includes a client letter that provides ready-made talking points that you can incorporate in meetings, emails, or newsletters.