IRS Commissioner Charles Rettig says there’s “replicating” of tax evasion with cryptocurrencies using nonfungible tokens (NFTs), CNBC reported on Wednesday (April 14), adding that the IRS is looking at the dark web for crime related to crypto or NFT transactions.
Rettig, speaking before the Senate Finance Committee on Tuesday (April 13), said the U.S. fails to collect around $1 trillion in taxes annually because of the new popularity of crypto. Cryptos are difficult for the agency to track and tax.
NFTs, he said, are just more of that same kind of issue for the IRS.
“So now we have these nonfungible tokens, which are essentially collectibles in the crypto world,” Rettig said, according to CNBC. “These are not visible items by design. The crypto world is not visible.”
Sen. Rob Portman of Ohio said he was working on a bill that would require more reporting and disclosure around crypto transactions. Rettig said it was important to have more of that.
NFTs have seen a surge in new popularity and value as of late, which CNBC writes will result in a new set of tax questions. NFTs accounted for more than $2 billion in sales in the first quarter in the platforms tracked by NonFungible.com, CNBC reported.
While buyers purchase NFTs with crypto, many U.S. NFT buyers haven’t been aware that they’re required to pay a capital gains tax when they’ve used appreciated crypto to make a purchase.
Those that see potential in NFTs to go beyond a temporary fad have begun looking at ways to integrate them more into the mainstream, including Circle, which recently rolled out a new service for NFT platforms and merchants, letting them accept credit card and crypto payments.
Recently, Visa announced that it is using stablecoins to settle transactions, and both of the aforementioned upgrades are intended to help streamline the way digital currencies and items are handled.