So, there’s this dude from Austin, Texas who just got hit with a two-year prison sentence for lying about his capital gains from selling $3.7 million in bitcoin. This is apparently the first case of someone getting criminally charged for tax evasion specifically related to crypto.
Frank Richard Ahlgren III filed false tax returns between 2017 and 2019, leaving out or misreporting the sale of around $4 million in bitcoin, as per court docs and what was said in court.
The DOJ pointed out that Ahlgren was one of the early bitcoin investors, having bought in back in 2011. He went through Coinbase to grab 1,366 bitcoin in 2015 and sold 640 of them in October 2017, using the cash to buy a house in Park City, Utah.
But here’s the kicker: Ahlgren straight-up lied to his accountant by giving a fake summary of his bitcoin gains and losses. He tried to say he bought bitcoin for more than he really did. The DoJ claims his 2017 federal tax return had a cost basis that was way too high.
Tax evasion is a serious crime. Now look where it has landed him two years in jail for changing figures. He has a stain on his name. What could have been totally avoidable. In my estimation, since this is not a crime like murder, I don't think he'll spend the whole of the two years in prison. Maybe after some months, he will be allowed to live off site, but unable to leave the area where he live. He may probably have to report everyday to the authorities until he has done his time. Not to derail from the topic, I am of the opinion that taxes should be deducted automatically out of your wages if you're working for a company that has a finance department to deal with that. If there is also way too for means for crypto exchanges to do it, it will be fine and prevent people from knowingly committing a crime. Better still move to a tax haven country if you do no want to pay no tax.
It is not easy to move from your country where you families and relatives are to another country. Also most developed countries have crypto tax that their citizens have to pay. Also if you know how many people are evading tax, you will see how many people are tempted to evade tax, although it is not good. The best would have been for him to pay tax but some people will think that not the government that helped them in making the money and have no tax to pay.
I think two years is too much. Six months to one year is enough for the punishment.
Well, looking at the amount it indeed is a criminal activity. Same action will be taken in many other countries as well. People need to understand everything is linked to their national ID so everything is traceable to a certain extent. Also IRS is know for their strict actions against the tax defaults. So why to take chance?
I am sure my country would have taken similar steps as well for such kind of under-reporting of income. The amount is huge!
He intentionally evaded tax and should be punished for that. If you enjoy basic amenities which the government provides, you should be willing to pay tax. According to the news he used different wallets and also used some anonymity tools to concele his returns. I also think that he should have been asked to pay the tax he evaded and given a sentence of less than six months or community service.
Except the tax is exuberant, the cost of moving to another country might be might be greater than the accrued tax..
Unfortunately moving to another country and changing your citizenship has to be organised before you start buying cryptocurrency
I know for sure that as long as you are a US citizen and you made profit, you are obliged to declare your income in the US and pay taxes.
There was already one illustrative case of Russian businessman Tinkov, who was a US citizen but made a transaction with a large profit in another country. He ended up paying over $500 million in taxes and penalties under the agreement.
This case is well described in the press, if you are interested, you will have no problem finding the information on the internet.
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But what I find most interesting about this case is how the IRS found the bitcoins that were sold for cash.
According to the original report, he'll also be getting "a year of supervised release and has to pay $1,095,031 in restitution to the US".
Same here... In the same report, they did mention he blogged about mixers in 2014 and considering that such things were [and still are] always a sensitive subject, I'm leaning towards the other three letter agencies being in the mix [I do know it's not part of the report, but they must've been monitoring him for some time to connect the dots (IRS has access to a large pool of information, but AFAIK they don't do that kind of tracking)].
I guess they now have tech experts who are trained or have knowledge of how the crypto industry works. I still wonder why he sold those Bitcoins in 2017 to buy a house; he could have taken a mortgage and kept his Bitcoins or should have sold a few of them. Anyway, what he did is a crime and we might see more news on crypto tax evasion coming out soon.
Yes I agree with you on this too, 2 years in prison is a very harsh sentence for tax evasion but according to the article I think the reason is that the accused Ahlgren made a concerted effort to hide his bitcoin sales by using multiple wallets and exchanging bitcoin for cash in person and he also used mixers in May 2014.
I am for imposing penalties on tax evasion related to bitcoin and cryptocurrencies because people are still demanding that their governments adopt bitcoin so they should pay their taxes in return.
Didn't Roger ver renounce his U.S. citizenship and moved to another country, yet he is facing extradiction due to a tax evasion case, and there are rumors he may face up to 109 years in prison. I believe the option of moving to another country has to be before you buy crypto or made any gains on your coins, not after, no?