Blockchain Tax Attorney

Experienced Attorneys Representing Clients Nationwide Blockchain and Cryptocurrency Tax Compliance and Litigation

For individuals and businesses, blockchain technology and cryptocurrency open up a new frontier of business opportunities. However, with these new opportunities comes additional responsibilities, including tax obligations. The Internal Revenue Service (“I.R.S.”) has made it clear that it considers cryptocurrency a type of property. Thus, those who deal in cryptocurrency, either as a primary part of their business or as casual traders, must report their transactions. Failure to report cryptocurrency transactions can result in significant underpayment penalties and, in some cases, criminal enforcement actions.

Alina Veneziano
Attorney Alina Veneziano
Blockchain Tax Attorney & CPA
Team Leadenvelope iconContact Alina directly
Paul Strickland
Attorney Paul Strickland
Blockchain Tax Attorney
Team Lead
Tim Allen
Tim Allen
Blockchain Tax Attorney Team
Former U.S. Secret Service Special Agent

At Oberheiden, P.C., our blockchain tax attorneys have extensive experience handling a wide range of cryptocurrency and blockchain tax matters on behalf of our clients nationwide. Many of our senior attorneys have personal experience working in regulatory and prosecutorial capacities within the federal government, giving us unrivaled insight into how the government handles these cases and what can be done to limit your tax liability.

How Is Cryptocurrency Taxes?

Although bitcoin, Ethereum and other cryptocurrencies are viewed as “currency” by the general public, that isn’t how the I.R.S. sees them. Instead, the I.R.S. considers these assets “property,” much like stocks. In some ways, this creates a more favorable tax environment for investors and businesses in that the tax rate is lower than if the assets were considered traditional earned income; however, this classification also limits the amount one can write off in losses per year to $3,000.

Because cryptocurrency is considered property, the applicable tax rate depends, in part, on how long you hold it. Crypto transactions are either subject to short-term or long-term capital gains tax. A short-term gain is defined as a buy and a sell occurring within 365 days. Long-term gains occur when you sell cryptocurrency after holding it for more than a year.

The short-term gain tax rate for cryptocurrency is the same as for other short-term gains. For example, in 2021, the short-term tax rate ranges from 10% to 37%, depending on your income. The rate for long-term crypto gains in 2021 is significantly lower, ranging from 0% to 20%, again, depending on your income. These rates are scheduled to remain the same for 2022; however, the income threshold between tax rates changes slightly based on inflation.

Keep in mind that you need to report a cryptocurrency transaction whenever you sell or trade the underlying asset. Historically, crypto holders could “purchase” things with their crypto assets, but, in reality, this required the instantaneous conversion of the assets to the U.S. Dollar. Thus, the currency used for the purchase was actually U.S. Dollars. Today, there are more options to purchase things directly with cryptocurrency; without needing to convert the assets into U.S. Dollars. However, whether you convert your crypto to U.S. Dollars or buy something directly with bitcoin or another cryptocurrency, the taxability of the transaction is identical.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd
Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester
Brian J. Kuester

Former U.S. Attorney

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney

Local Counsel

John W. Sellers
John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara
Linda Julin McNamara

Federal Appeals Attorney

Aaron L. Wiley
Aaron L. Wiley

Former DOJ attorney

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (DOJ)

Chris Quick
Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow
Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Blockchain, Cryptocurrency and Money Laundering

For many, one of the major draws of cryptocurrency is the pseudonymous nature of the transactions surrounding these assets. However, pseudonymous is not the same thing as anonymous, and the federal government has ways of tracking cryptocurrency transactions. This is especially the case in recent years, as the government has taken a hard stance on cryptocurrency money laundering.

Money laundering is an attempt to convert illegally obtained assets into legitimate money. Historically, cryptocurrency has been a haven for money launderers because of the pseudonymity and general lack of understanding surrounding these assets. However, in today’s climate, holders of cryptocurrency should be under no illusions that their transactions are traceable.

Blockchain Lawyers for Small Businesses, Entrepreneurs, and Cryptocurrency Miners

If you operate a small business or cryptocurrency mining operation, you have unique tax concerns that fall beyond the scope of most tax attorneys. From setting up your business entity to logging all relevant transactions to reporting sales to complete your taxes, there are many steps to effectively running a blockchain business. At the same time, given the federal government’s recent focus on the prosecution of blockchain crimes, everything you do will be viewed under a microscope.

For most business owners, it doesn’t make sense to take on the risk of handling these matters on your own. Your knowledge is centered around your business and how to make it profitable. You may even possess a keen understanding of the regulatory environment you operate within. However, unless you also command a detailed knowledge of the ever-changing tax laws and regulations surrounding blockchain businesses, it is best to consult with an experienced blockchain tax attorney.

At Oberheiden, P.C., we represent individuals, entrepreneurs, small business owners and cryptocurrency miners in all aspects of blockchain tax compliance and litigation. We are immediately available to answer your questions, provide you with sound guidance, and advocate on your behalf to the I.R.S. or other federal agencies.

Frequently Asked Questions:

What Happens if I fail to Disclose Cryptocurrency Gains?

 

If you fail to file gains you made through cryptocurrency trading, the I.R.S can assess a tax penalty against you. The amount of the penalty depends on the amount of withheld income; for example, if your return is over 60 days late, the minimum failure-to-file penalty is $435 or 100% of the tax you should have paid, whichever is less. However, in some cases, the I.R.S. will pursue criminal charges against someone who the I.R.S. believes engaged in fraud or frequently disregarded their tax obligations. Penalties for tax fraud range significantly; however, a single count of tax fraud under Internal Revenue Rode § 7201 carries a maximum penalty of 5 years in jail and a fine of up to $100,000 ($500,000 if the party is a corporation).

Are Cryptocurrency Transactions Anonymous?

 

No, although bitcoin and other cryptocurrencies have a reputation for being “anonymous,” transactions involving these assets can be traced. The federal government has a variety of ways to track cryptocurrency transactions. Perhaps the most obvious is tracing the conversion of cryptocurrency to U.S. Dollars. Most cryptocurrency transactions require the payer first convert their crypto assets into dollars; this creates a paper trail. Thus, those who “trade” or “redeem” their cryptocurrency through a sale cannot avoid the reporting requirements of the I.R.S.

Is Bitcoin Taxable?

 

Yes, according to the Internal Revenue Service, cryptocurrency or “virtual currency,” as the IRS calls it, is considered “property” under the tax code. As a result, any gains you make trading crypto are subject to federal income tax (and possibly state income tax, depending on where you live). On the other hand, if you lost money on your cryptocurrency investment, you could write off your crypto losses as investment losses. Of course, a taxable event only occurs when you sell or trade your bitcoin or other cryptocurrency; if you hold the assets, you do not need to worry about taxes (until you sell or trade them). For most, holding cryptocurrency for a period of more than a year results in a lower effective tax rate. Those with questions about the taxability of cryptocurrency should reach out to a dedicated blockchain tax lawyer for immediate assistance.

Contact Oberheiden, P.C. for Assistance with Your Blockchain Tax Matters

If you recently received word that you are under investigation by the I.R.S. or any other federal agency or you have questions about how to comply with the I.R.S. cryptocurrency reporting requirements, it is imperative that you reach out to the knowledgeable blockchain tax attorneys at Oberheiden, P.C. Now more than ever, the I.R.S. is on the lookout for tax evasion related to cryptocurrency and blockchain technology. The federal government is looking to make an example out of those who they identify as having intentionally withheld crypto income or committed other blockchain-related tax frauds. At Oberheiden, P.C., we represent crypto investors and blockchain businesses in I.R.S. and criminal proceedings, helping them clear up the situation and minimize—or eliminate—their liability. We can also reduce the chances of criminal charges being brought against you. To learn more, and to schedule a free consultation with a crypto tax lawyer at Oberheiden, P.C., call 866-926-3417 today. You can also connect with us through our online contact form.

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