Brazilian IRS Creates New Penalty Code For Misreporting Crypto Taxes

The Brazilian IRS is now watching closely on crypto deals and transfers thus creating a special penalty code for misreporting crypto taxes as we are about to read further in the crypto news below.

If users fail to file a monthly report of crypto-asset movements, they will trigger the ‘’Revenue code 5720-Default for Default/ Incorrect/ Delay in reporting on transactions performed with crypto’’ as per the OBN news reports. The Brazilian IRS introduced this crypto regulation earlier in August and they claim to have received reports for about $14 billion in transactions in the past few months. It is still unknown how those figures were reached and whether it is based on transfers alone or trading as well.

The IRS requirements only involved transactions related to trading which means that if you move actual coins it will be anonymous in most cases but when a coin is traded for fiat, a taxable event has to occur. For example, accounting for November trades has to happen by the end of December. Based on the volumes by LocalBitcoins, the interest in Brazil is relatively stable and the local exchanges are now highly active while the Brazilian real makes up to about $0.03% of the total BTC trading globally. The taxation approach in the country is very similar to one of the US IRS. The taxman also observes accounts and exchanges and brokerages. Holding BTC however, does not generate a taxable event despite the price fluctuations.

The revenue services around the world, however, are also learning about the transparency of the Bitcoin network and the very potential to trace transactions directly. The principle that is reserved for criminal investigations is also known to the IRS. One of the major crackdowns on the BTC usage for 2019 happened with the Welcome to a Video website which was a darknet network that offered underage content. With the help of Chainalysis, the RIS managed to track the BTC addresses to account and real-world identities. The IRS reported:

“By analyzing the blockchain and de-anonymizing bitcoin transactions, IRS-CI special agents were able to identify hundreds of predators around the world – even though those users thought that they could remain anonymous.’’