Also known as new regulations have been introduced, and you might want to re-think your investment strategy.. In the United States alone, the White House estimates closing the crypto reporting gap could net up to $28 billion in new tax revenues over the next 10 years 3. Depending on the crypto exchange you use and how many transactions you engage in and the aggregate dollar amount you may receive a Form 1099-K. It uses Tor as a truly anonymous peer-to-peer network and does not store fiat currency or bitcoins on its servers or accounts. These exchanges do not report to the IRS (Internal Revenue Service) since they are not considered as financial institutions. Payment Gateway Setup and eCommerce Solutions, Complete Dating and Match Making Solutions. The Rise Of Crypto Regulations As attractive and full of potential as crypto might seem, it comes with a lot of risks. The fair market value of your crypto in USD the day you disposed of it. The report sheds light on an open secret in the . It is anticipated that such return will include generally the same information that is furnished in a broker-to-broker transfer. Nevertheless, you would answer yes to the tax-form question. Besides (the myth continues), income. So in 2020, the IRS upped its game by moving the virtual currency question to the 1040 itself, which is used by all individuals filing an annual income tax return. As cryptocurrency is becoming increasingly popular, many people are looking for ways to report their transactions and pay taxes on them. It further requires the broker or barter exchange to file a Form 1099-B for each person who exchanged property or stock or services through the barter exchange. This summons compels a business to share user data with the IRS in order to identify and audit taxpayers. The message comes straight from up-top and stretches right down to the gutter. Which crypto exchanges do not report to the IRS? This is not the time to skip your crypto taxes, because everybody above you is looking into this space and they're implementing stricter rules, Shehan Chandrasekera, head of tax strategy at CoinTracker, a company that produces software to aid filing crypto taxes, told, Here is what is supposed to happen: Cryptocurrency exchanges should provide you with a 1099 form, which outlines all of the transactions you placed on their exchanges, which informs you how much tax you have to pay the IRS (which also happens to, work with blockchain analysis firm Chainalysis, subpoenaed crypto exchanges for information, But exchanges dont do that, according to an. Its tax season once again. The Infrastructure Investment and Jobs Act of 2021 (IIJA) was signed into law on Nov. 15, 2021. "At that point, the IRS said 'We'll let you fix this,' but is less likely to do that moving forward," said Knox Wimberly, an IRS enrolled agent and the CEO of Taxaroo. Bitcoin Cash (BCH) Listed In New Yorks Proposed Bill As Means Of Payment, Litecoin (LTC) Partners With Metalpha, TMS Network (TMSN) Presale Sells Out First Stage 2 Weeks Early! As such, it is important for users of Blockchain Wallet to be aware of the reporting requirements and to make sure they are in compliance. Though these wallets havent had the IRS chasing after them yet if and when they do, thats enough information to identify you with. A separate set of instructions are issued to crypto exchanges and crypto brokers in extension with the current reporting requirements for Form 1099-B and Form 8300. The IRS treats virtual currencies like bitcoin as property, meaning that they are taxed in a manner similar to stocks or real property. On February 9, 2023, the SEC pushed the crypto exchange Kraken out of the business of providing interest to U.S. retail investors who loaned it cryptocurrency (a process known as staking). Global Business and Financial News, Stock Quotes, and Market Data and Analysis. If you receive a Form 1099-B and do not report it, the same principles apply. For a long time, the IRS largely ignored the crypto market, leading many crypto investors to mistakenly believe they could underreport or outright avoid crypto taxes. 4 min read. Heres whats new These taxpayers get until June 15 to file their returnsHow Social Security benefits are handled at death. Crypto tax rates for 2022 These transactions are taxable, and Kraken is obligated to report all of its taxable income to the IRS. Most people in the country are unaware of the risks yet are willing to invest thousands of dollars on a contingent digital asset. Here at NewsBTC, we are dedicated to enlightening everyone about bitcoin and other cryptocurrencies. "A lot of people have actually overreported their income, because they got confused," Shehan said. US Crypto Investors May Need To Consider Amending Past Tax Returns, may be deemed traders by the United States Internal Revenue Service. Updated Q5 on. Crypto taxes involve the reporting and paying of taxes on income derived from cryptocurrency transactions. But now, those crypto wallets are getting a whole lot of attention from the Internal Revenue Service and President Joe Biden, who appear determined to crack down on tax cheats. Breaking News Update on Status of OSHA Emergency Temporary Standard (ETS) for Employers with 100 or More Employees. Using cryptocurrency holdings for sale or exchange of other property may lead to a gain or a loss. They dont collect KYC data after all. Let's dive in. This goes for ALL gains and losses regardless if they are material or not. But before the crypto community can breathe a collective sigh of relief that reporting crypto gains just got a lot easier, the new bill proposed only requires crypto investors with gains of over $200 to report them to the IRS. Non-fungible tokens (NFTs) Digital assets are not real currency (also known as "fiat") because they are not the coin and paper money of the United States or a foreign country and are not digitally issued by a government's central bank. These exchanges may not have the same regulations and requirements as traditional exchanges, and they may not report to the IRS. IRS chief Charles Rettig says the country is losing about a trillion dollars every year in unpaid taxes, and he credits this growing tax gap, at least in part, to the rise of the crypto market. However, not all crypto exchanges report to the IRS.The crypto exchanges that do not report to the IRS are typically decentralized exchanges (DEXs), which are not run by any central authority or organization. This data is used by the IRS to ensure that individuals are reporting their cryptocurrency gains and losses in accordance with tax laws. However, the AICPA (and FML) believe the reporting requirements do in fact apply to U.S. taxpayers. Some parting thoughts to keep in mind: First, if you use a Crypto Exchange, and it has not already collected a Form W-9 from you (seeking your taxpayer identification number), expect it to do so. The U.S. Treasury Department's new "Greenbook," released in May, calls for more comprehensive reporting requirements for crypto, so it's as hard to spend digital currencies without getting reported as it is to spend cash today. All Rights Reserved | Powered by Zenwork, Inc. | 1 East Center Street #250 Fayetteville, AR 72701 Monday - Friday, 8AM to 6PM CST. If you buy one bitcoin for $10,000 and sell it for $50,000, you face $40,000 of taxable capital gains. People use cryptocurrency for many reasons quick payments, to avoid transaction fees that traditional banks charge, or because it offers some anonymity. Cloudflare (ticker: NET) expects earnings for the current quarter of between 3 cents and 4 cents a share. Take Advantage of Tax1099s Real-Time TIN Matching Feature, Everything You Need to Know About Employer Identification Numbers (EINs), Crypto Exchanges: Simplify Your Tax Compliance And Due Diligence Processes With Tax1099, Crypto Reporting Transparency: A Key Focus, 2023 1099 Reporting Requirements: Highlights, What To Expect In 2023: Investors Perspective. All Rights Reserved. Those confused about what to report on their taxes should consult a certified public account, tax advisor, or opt for a service like Bitcoin.tax in order to ensure no gains or losses are missed, and all taxes are properly reported to the IRS. When it comes to taxes, crypto exchanges are obligated to report certain transactions to the IRS. In 2019, the IRS announced it was sending letters to more than 10,000 people who potentially failed to report crypto income. recounted Shehan. April 7, 2022 For now, the IRS regards bitcoin and other cryptocurrencies like property. I missed the "note" at the end. But experts said the question was vague, and crucially, not everyone files this specific document. Digital assets. Exchanges like Coinbase have also begun to send Form 1099-MISC to taxpayers who earned $600 or more on crypto rewards or staking. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Exchanges that issue 1099 forms to users include Binance US, Robinhood, Crypto.com, Celsius, eToro, Gemini and Kraken to name only a few. Therefore, it is essential to do due diligence and research any crypto exchange before using it to make sure it is trustworthy and secure.Some of the most popular non-reporting exchanges include LocalBitcoins, Bisq, ShapeShift, Changelly, and BitMEX. In the future, the IRS will have even more information about cryptocurrency . If you used one cryptocurrency to buy a different cryptocurrency, then you will have to report that. "From a tax standpoint, swapping one cryptocurrency for another cryptocurrency. Also, anycryptocurrency that you mine must be included in your taxable income. The most popular C2C exchanges are LocalBitcoins, HodlHodl, Binance P2P, Paxful, and WazirX. My wife told me that supposedly there is a 38% cut on taxes or something like that, don't quote me but I know coinbase has around a 1.5% fee off whatever you withdraw (again don't quote me) as I am not sure exact figures. For example, if you transfer cryptocurrency from your wallet at one Crypto Exchange to your wallet at another Crypto Exchange, the transaction is not a sale or exchange. To operate in the US, all centralized crypto exchanges now need to have some kind of KYC verification in place. Buying crypto with fiat and holding onto it is not a taxable event either. Tax Report; The IRS Is Coming for Crypto Investors Who Haven't Paid Their Taxes On the hunt for tax cheats, Uncle Sam is winning court battles to force cryptocurrency exchanges to reveal their . Of course, if you owned, say, bitcoin, but engaged in no related transactions last year (i.e., you just held it), you had no taxable event. Follow @TonyTheBull on Twitter and search CoinChartist on YouTube. These digital asset reporting rules will apply to information reporting that is due after December 31, 2023. The IIJA includes IRS information reporting requirements that will require cryptocurrency exchanges to perform intermediary Form 1099 reporting for cryptocurrency transactions. The new reporting requirements ask the crypto exchanges to treat crypto or digital assets like cash, essentially aiming to improve the accuracy of reports. Depending on your tax bracket for 2020, that could range from a rate of 10% to 37%. Not until you choose to trade or sell it. We cover BTC news related to bitcoin exchanges, bitcoin mining and price forecasts for various cryptocurrencies. For years, the cryptocurrency holdings of U.S. taxpayers have existed in a sort of reporting gray zone. Furthermore, users may still be required to provide additional documents such as proof of identity and proof of residence. Your 2021 Form 1040 will include questions about cryptocurrency. Present moment crypto gains on buys held for under a year are dependent upon similar expense rates you pay on any remaining pay: 10% to 37% for the 2022-2023 duty recording season, contingent upon . These exchanges do not require the user to provide any personal information or KYC (Know Your Customer) documents, making it difficult for the IRS to trace and track transactions. So theres nowhere to hide. Likewise, Coinbase, Kraken, Binance.us, Gemini, Uphold and other US exchanges do report to the IRS. The most popular C2C exchanges are LocalBitcoins, HodlHodl, Binance P2P, Paxful, and WazirX.These exchanges do not require the user to provide any personal information or KYC (Know Your Customer) documents, making it difficult for the IRS to trace and track transactions. Understanding When To Use Tax Form 1099-NEC Instead Of 1099-MISC, Currently, the IRS requires brokers or barter exchanges to file a. Additionally, it requires exchanges to report cash, stock, or other property received by the investor through a corporation known to the broker. At the same time, the risk is too high and there is no way to track who is the ultimate beneficiary. In 2014, the IRS issued Notice 2014-21, 2014-16 I.R.B. $600 is the Coinbase IRS reporting threshold for tax year 2022. The presence of a new crypto question on 2019's Schedule 1 form has individuals concerned about reporting their crypto assets correctly more than ever, and according to experts, this is for good . Remember that I am here to help you and can provide solutions for any tax related challenges that may develop. The high-level thing is that if you didn't do anything intentionally, you are fine.". Issuing these summons one exchange at a time is a clumsy way to capture noncompliant U.S. taxpayers, but it can be effective, according to Jon Feldhammer, a partner at law firm Baker Botts and a former IRS senior litigator. While the act is dubbed the "tax fairness act," only offering exemption to investors with under $200 in gains is really stretching the idea of "fair." Form 1099 K vs 1099 MISC vs 1099 NEC Whats The Difference? Report any gains made on crypto assets on your personal income tax returns. For the reporting requirements, a digital asset is any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology. Many exchanges that do not report are unregulated and may not adhere to certain standards of security and compliance. As a result, Coinbase and other large exchanges began by issuing 1099-K forms. The Internal Revenue Service (IRS) has made it clear that it intends to monitor cryptocurrency exchanges, and that failure to report cryptocurrency transactions to the IRS could result in criminal charges. One proposal would require businesses to report to the IRS all cryptocurrency transactions valued at more than $10,000. Heres everything you need to know about the new crypto exchanges reporting requirements for cryptocurrency transactions in the 2023 tax year. The issue here was that 1099-K forms report gross proceeds - not gains and losses. But the biggest issue driving noncompliance is the fact that the tax rules surrounding digital currencies are still being worked out, and in a state of constant flux. 5635, designed to amend the IRS code of 1986, to exclude gross income gain from the disposition of virtual currencies. The act is being dubbed the Virtual Currency Tax Fairness Act of 2020 and was put forth by House Representatives Suzan DelBene (D-WA), David Schweikert (R-AZ), Darren Soto (D-FL), and Tom Emmer (R-MN). Crypto exchanges are required to report all crypto transactions on Form 1099-B, specifying the payee TIN and legal name. Like leading exchanges Binance and Huboi, Kucoin has transitioned into a crypto company that offers a broad range of services, operating under various subdivisions. Yes, Kraken does report to the IRS. Coinbase began submitting 1099 forms to the IRS and to individuals users in 2017. Play Now! Two identical copies go out one to you and one to the IRS. The new rules are upheld for crypto and certain NFTs that use blockchain technology. President Biden has proposed to eliminate the difference between the two," said David Lesperance, a Toronto-based attorney who specializes in relocating the rich. Coinbase said in the post it will not issue IRS form 1099-K for the 2020 tax year. Do KYC exchanges report to IRS? The cryptocurrency market is still volatile, and inexperienced investors must brace themselves for a rollercoaster of emotions. The company . Tax year 2019 was the first time the IRS explicitly asked taxpayers whether they had dealt in crypto. Quite a few ways actually, but they mostly revolve around the increasing amount of personal data available surrounding crypto transactions. Even if no tax is due in year 2020, if a taxpayer answers no in 2020 based on the FAQ but then does not file a tax return for 2021, or files a tax return that omits a crypto transaction, rest. Second, the transactions subject to the reporting will include not only selling cryptocurrencies for fiat currencies (like U.S. dollars), but also exchanging cryptocurrencies for other cryptocurrencies. Most exchanges do not report transactions directly to the IRS, so many people need to fill out Form 8949 for each trade they make. Starting from January 1, 2023, investors should expect a Form W-9 from their crypto exchanges or brokers (if it hasnt been sent to you already). Now, introducing such a measure out of nowhere would not be well-received by the taxpayers. Use. Tagged: crypto, cryptocurrency, cybercurrency, digital asset, IRS, tax, tax planning, tax reporting. Generally, these rules will apply to digital asset transactions starting in 2023. What do I Need to Report about Crypto to the IRS? The users digital wallet remains completely anonymous, as the exchanges do not hold any personal information.C2C exchanges are mostly used to exchange cryptocurrencies for fiat currencies, like Bitcoin for USD. Despite the convenience of these exchanges, users should always be aware of the risks associated with trading on these exchanges. KYC processes vary but in general as a minimum, theyll include information like: Some exchanges even ask for your social security number on top of this. Although these exchanges do not report to the IRS, they still require users to provide personal information such as name and address. All Rights Reserved. This feature can be a huge time saver when compared to manually having to add hundreds of . Both Form 1099-B and Form 8300 must clearly identify the payee with their TIN in correspondence with the transaction. Your broker uses that form to report details of transactions such as sale proceeds, relevant dates, your tax basis for the sale, and the character of gains or losses. The difference is that, in that scenario, the crypto is treated like wages which are subject to ordinary income taxes, as well as self-employment taxes for those who are paid as a nonemployee and receive a 1099-NEC from the business that paid the crypto, Hauer said. Got bitcoin or other crypto? Bill Gates: I don't own bitcoin and have taken a neutral view on it, These taxpayers get until June 15 to file their returns, How Social Security benefits are handled at death, High up on the first page of your tax return. But the IRS doesn't usually accept. When you receive a 1099-K from a cryptocurrency exchange, a copy automatically goes to the IRS. The Infrastructure Investment and Jobs Act of 2021 (IIJA) was signed into law on Nov. 15, 2021. Event Planner WordPress Theme 2022 Tax1099.com. Ultimately, it is the responsibility of the user to ensure that all applicable taxes are reported and paid. While some crypto exchanges have begun to issue a tax form known as the 1099-K which is traditionally given to an individual who engages in at least 200 transactions worth an aggregate $20,000 or more in the context of crypto, this form only reports the total value of transactions. Think again. Learn how crypto taxes work, 2023 tax rates, and a step-by-step guide to filing your taxes. It could come back to bite you if you don't let the IRS know about it. However, the IRS is giving time to taxpayers to adjust to the new regime without disrupting the reportable transactions until December 31, 2022. Got a confidential news tip? The U.S. Exchange and Securities Commission has sparked new debates in the cryptocurrency community, among key players in the market, after Gary Gensler, the Chairman of the SEC made some important comments concerning cryptocurrency exchanges in the country.. Kraken is a digital asset exchange that helps people buy and sell digital assets. 1010.350 because it holds reportable assets besides virtual currency). Stay aware of rules and enjoy crypto trading, mining, and exchanges. And the "tax gap," which is the difference between taxes paid and taxes owed, is a big pool of cash ripe for the picking. "A lot of people ask me on Twitter: 'Oh my god, in 2018, I had $200 worth of capital gains I didn't report. The IRS has put crypto front and center for this tax-filing season. The information reported on this form helps the IRS and the FinCEN (Financial Crimes Enforcement Network) to track businesses and trade exchanges that are misusing the financial ecosystem for money laundering, drug trafficking, tax evasion, terrorism financing, and other illegal activities. Crypto exchanges would need to report crypto brokerage services and sales on Form 1099-B. The US, Treasury Inspector General for Tax Administration, says that the Internal Revenue Service isnt pulling its weight and must do more to get cryptocurrency exchanges, whore. There are a few reasons why exchanges havent issued forms: The first, hazards Chandrasekera, is that there's probably a crossover between tax haters and crypto lovers, so its not good for business for companies to scare customers about tax., The second, says the audit, is that the IRS hasnt issued guidance clarifying the proper information reporting associated with virtual currency transactions.. Additionally, some crypto exchanges that are based overseas may not report to the IRS because they are not subject to U.S. tax laws. If you have questions or concerns about the digital asset reporting rules, please do not hesitate to contact me. This spring, courts authorized the IRS to issue John Doe summonses to crypto exchange operators Kraken and Circle as a way to find individuals who conducted at least $20,000 of transactions in cryptocurrency from 2016 to 2020. Disclaimer: Although the material contained in this website was prepared based on information from public and private sources that TELcrush.com believes to be reliable, no representation, warranty or undertaking, stated or implied, is given as to the accuracy of the information contained herein, and TELcrush.com expressly disclaimsany liability for the accuracy and completeness of the information contained in this website. If you trade through a brokerage, you typically get a Form 1099-B spelling out your transaction proceeds, streamlining the reporting process. Closing. You may have noticed an increasing number of centralized exchanges are now adopting advanced KYC processes where they collect data like: Other exchanges (and indeed even decentralized wallets in some instances) will also collect other information about you including your bank account details and phone number. If you have a gain, you'll be taxed on it. Given the additional scrutiny, thats remarkably good advice. NewsBTC is a cryptocurrency news service that covers bitcoin news today, technical analysis & forecasts for bitcoin price and other altcoins. Ashok is a software developer, technology enthusiast, founder, and director of a reputed software development company. A Schedule 1 is typically used to report income not listed on the Form 1040, such as capital gains, alimony, or gambling winnings. If you purchased your virtual currency with USD or other fiat in 2021, that does not need to be disclosed. Market timing though DeMark indicators, Ichimoku, Gann tools, or Hurst Cycle Theory are also of key interest. Unless a crypto investor bought the top of the crypto hype bubble, chances are theyve seen some sort of gain over $200 at some point in their crypto investing career. For starters, if youre moving crypto between centralized exchanges and decentralized wallets that exchange has your wallet address and that information is up for grabs for the IRS. The IIJA includes IRS information reporting requirements that will require cryptocurrency exchanges to perform intermediary Form 1099 reporting for cryptocurrency transactions. According to cryptocurrency tax software TaxBit which recently contracted with the IRS to aid the agency in digital currency-related audits tax rates vary between 10%-37% on mining proceeds. Crypto exchanges are required to file a 1099-K for clients who have more than 200 transactions and more than $20,000 in trading during the year. Crypto exchanges don't issue the correct forms, a TIGTA report claims. You may be aware that when a business receives $10,000 or more in cash in a transaction, that business is required to report the transaction, including the identity of the person from whom the cash was received, to the IRS on Form 8300. Even if you don't receive it, there are reporting requirements. After all, how could the IRS possibly know about all your crypto, right? So, lets take a look at these new rules and extensions to the current reporting regime for Form 1099-B and Form 8300 in detail in the following discussion. Analysts surveyed by FactSet were expecting first-quarter earnings of 3 cents. Again, even if you don't receive a form, that does not relieve you of your responsibility to report the income and pay any taxes owed. Maker (MKR) Survives Onslaught With 21% Gain As Other Top 100 Cryptos Suffocate, Bitcoin Price Crashes Below $22,000, These Are The Reasons, Mintlayer Is Opening Bitcoin To Decentralized Finance, Shiba Inu (SHIB) whales tired of waiting, start to move towards RenQ Finance (RENQ), Flux Algorand Parallel Asset Expands DeFi and Cross-platform Development Opportunities Across the Two Blockchains. Form 8300 reporting of cash transactions will presumably follow the same effective dates. Eager to help brilliant minds, and entrepreneurs with MVP ( Minimum Viable Product ) development, and technology consultation. The IRS also put this same type of summons to use in 2016, when it went after Coinbase crypto transactions from 2013 to 2015. This information must be consistent with the reports submitted to the IRS by the crypto platform. Operation Hidden Treasure launched in March 2021. If you don't report transactions that have been reported to the IRS via Form 1099, you may automatically be sent a warning letter about your unpaid tax liability.. . Crypto exchanges must incorporate a KYC procedure to identify their customers and obtain the taxpayer identification number (TIN) or its equivalent (social security number or EIN) prior to onboarding the profiles. In brief, it is important for taxpayers to understand their reporting requirements in order to ensure that their taxes are properly reported. High up on the first page of your tax return, a yes or no question is posed: "At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?". If you had income from crypto whether due to selling at a profit or receiving a digital asset for work performed failure to report it could come back to bite you. Data is a real-time snapshot *Data is delayed at least 15 minutes. All Rights Reserved. If you need to report crypto income both because you had 2020 gains and you received it as compensation, the amounts gets entered in separate spots on your tax return. Its an operation led by the IRS and the civil office of fraud enforcement, starring a specialized team trained in tracking digital assets with one goal to root out tax evasion and fraud. Crypto exchanges don't issue the correct forms, a TIGTA report claims. In this article, you'll learn when your crypto is taxed and how your activity might affect your taxes. Therefore, if you receive any tax. Sign up for free newsletters and get more CNBC delivered to your inbox. March 2, 2023 3:26 PM PT. "Crypto gains are being taxed as any other type of gain in assets, either at long-term capital gains or ordinary rates. Youll still need a third party to help you file your crypto taxes, he saysfor which the IRS levies capital gains tax on every cryptocurrency trade. Data is a real-time snapshot *Data is delayed at least 15 minutes. However, adapting to these changes is the key. According to Shehan, the infamous "Letter 6173" gave individuals 30 days to respond to the IRS, otherwise they risked having their tax profile examined. If youd like to learn more about crypto tax check out the ultimate US crypto tax guide. The rare subset of crypto investors, the HODLers that only buy and never sell, stacking sats on top of sats, are the few and far between that can take advantage of this bill, and can forget about having to report any crypto-related earnings in the future if the bill passes, that is. Understanding Tax Credits An Employers Guide To Business Tax Credits, Paying Independent Contractor How To Do It In 5 Easy Steps, Automate W-9 Information Collection for Smooth, Hassle-Free Payments Validate TINs with Tax1099, W-9 vs. 1099: Understanding the Differences Between IRS Contractor Tax Forms And When To Use Each, Everything You Need to Know About Taxpayer Identification Numbers and IRS TIN Matching. Billionaire CEOs Are Now Saying That Cryptocurrency Is Promising. Expect a copy of Form 1099-B and Form 8300 from the crypto exchange and use the details to cross-verify your income information. If there's a loss, you can generally use it against other income or investment gains, up to $3,000, and carry over the rest to subsequent years. This is not the time to play around, he said. The IRS states that the "character of the gain or loss generally depends on whether the virtual . The US Treasury Inspector General for Tax Administration says that the Internal Revenue Service isnt pulling its weight and must do more to get cryptocurrency exchanges, whore also not pulling their weight, to send the correct tax forms to their customers, who are grossly misreporting their tax returns.