The United States Internal Revenue Service (IRS) is preparing for the upcoming tax season, especially when it comes to digital assets.

according to a published bill By the tax regulator, investors in the US will be able to see if and how they are supposed to report their digital assets, which include crypto currencies and non-fungible tokens (NFTs).

The draft 2022 IRS tax forms have created a new category called “Digital Assets” for the different categorizations of assets that are tied to the emerging blockchain industry. To give a more emphatic and clear picture of the obligations it places on taxpayers, the IRS defined digital assets as;

“…any digital representation of value that is recorded in a distributed ledger with cryptographic security or any similar technology. For example, digital assets include non-fungible tokens (NFTs) and virtual currencies, such as CRYPTOCURRENCIES and stable currencies.

To avoid gray areas, the IRS stated that any digital assets that behave similarly to these assets under this definition will be treated as such.

The regulator established a set of conditions under which Americans will be required to give claims based on their cryptocurrency holdings. According to the bill, any person who has received a payment in cryptocurrencies during the last year has received or given away the assets categorized as digital assets, among other conditions, must properly report these items.

Tax crypto profits it is a highly volatile topic of discussion in the global ecosystem, and based on its crypto nature, the government believes that more people are choosing to hide their crypto transactions in an attempt to evade taxes.

The IRS has been exploring a host of custom solutions that may allow them monitor crypto transactions in an attempt to hold everyone accountable. In addition to working with exchanges to get the necessary data on demand, other private service providers are also helping the IRS develop tools that can help their crypto tax goals.

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