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But just how does cryptocurrency lead to tax evasion?
It largely comes down to lax reporting requirements, according to tax experts.
The IRS may not be able to trace crypto income or transactions if they go unreported by exchanges, businesses and other third parties. And that means the income may not be taxed.
“No one has put out clear rules on it, so there’s a lot of non-reporting going on,” according to Jon Feldhammer, a partner at law firm Baker Botts and a former IRS senior litigator.
“Any time you create a path of non-reporting, you create a way to benefit from tax fraud in an untraceable or a much-harder-to-trace way,” he said.