Pennsylvania man enters guilty plea for false CryptoPunks sales tax returns filing
Waylon Wilcox, a 45-year-old Pennsylvanian, pleaded guilty to hiding $13M in CryptoPunks NFT profits, leading to over $3M in tax evasion, and now faces up to six years in jail. The Justice Department stated that any taxpayer selling NFTs, including a Punk, then they must report their income (gains or losses) on their tax return.
The 45-year-old Pennsylvania man Waylon Wilcox admitted to selling 97 CryptoPunks NFTs worth over $13M – $7.4M one year and about $ 4.9M the next, but falsified IRS tax returns to evade over $3M in taxes, claiming he did not touch crypto in 2021 and 2022. He now faces up to six years of prison time, plus fines and supervised release.
According to the Justice Department, Wilcox appeared in Cumberland County federal court on April 9 before Senior U.S. District Judge Malachy Mannion and pleaded guilty to a two-count criminal information charge for faking individual income tax returns.
York County man omits over $13M from income tax returns
The Attorney’s Office for the Middle District of Pennsylvania announced that Wilcox obtained this undisclosed revenue after acquiring and selling 97 pieces of digital artwork (NFTs) from the ‘CryptoPunks’ collection of 10K unique art characters (or ‘Punks’).
Court documents and statements dated April 10, 2022, in Cumberland County, revealed that Wilcox filed a false individual income tax return for tax year 2021, under-reporting his income for tax year 2021 by roughly $8.5M, effectively reducing his tax–then due and owing–by nearly $2.1M.
On October 10, 2023, in Cumberland County, Wilcox filed another false individual income tax return for tax year 2022, again under-reporting his revenue for tax year 2022 by ~$4.5M, thus reducing his owed taxes by slightly over $1M.
The Justice Department stated on April 11 that when a taxpayer sells an NFT, including a Punk, then the taxpayer is required to report sales proceeds, including any gains or losses, from the sale of the NFT on their individual tax return. Philadelphia Field Office Special Agent in Charge Yury Kruty said the IRS Criminal Investigation is committed to unraveling complex financial fraud involving crypto and non-fungible token (NFT) transactions designed to conceal taxable income.
“In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
The case prosecutor, Assistant U.S. Attorney David C. Williams, alleged that Wilcox paid the IRS the owed amount as restitution before reaching the agreement. Wilcox could pay up to the maximum penalty of $500K in fines if found guilty.
U.S. tightens grip on crypto-related tax reporting
The U.S. Treasury Department and the IRS previously published in the Federal Register (88 FR 59576) proposed regulations (REG-122793-19) relating to information reporting under section 6045 by brokers, including crypto exchanges. Brokers, therefore, have long been on notice that the U.S. taxman would continue to tighten the noose on crypto-related tax filing.
The proposed regulations required reporting under section 6045 for certain transactions of digital assets that were made in exchange for cash, different digital assets, stored-value cards, broker services, or property subject to reporting under existing section 6045 regulations or any other property in a payment transaction processed by a digital asset payment processor (referred to in the final regulations as a processor of digital asset payments or PDAP). The broker reporting regulations for digital assets were initially added to the Treasury Priority Guidance Plan in late 2019.
The Treasury Department and the IRS claimed they received over 44K written comments in response to the proposed regulations, although Regulations.gov indicated that over 125K comments were received. Some comments expressed support for the definition of digital asset in the proposed regulations, while others raised concerns that the definition of digital asset went beyond the statutory definition found in amended section 6045.
However, one comment recommended applying the definition only to assets held for investment and excluding any assets that were used for other functions, including, in their view, non-fungible tokens (NFTs), stablecoins, tokenized real estate, and tokenized commodities.
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Pennsylvania man enters guilty plea for false CryptoPunks sales tax returns filing
Waylon Wilcox, a 45-year-old Pennsylvanian, pleaded guilty to hiding $13M in CryptoPunks NFT profits, leading to over $3M in tax evasion, and now faces up to six years in jail. The Justice Department stated that any taxpayer selling NFTs, including a Punk, then they must report their income (gains or losses) on their tax return.
The 45-year-old Pennsylvania man Waylon Wilcox admitted to selling 97 CryptoPunks NFTs worth over $13M – $7.4M one year and about $ 4.9M the next, but falsified IRS tax returns to evade over $3M in taxes, claiming he did not touch crypto in 2021 and 2022. He now faces up to six years of prison time, plus fines and supervised release.
According to the Justice Department, Wilcox appeared in Cumberland County federal court on April 9 before Senior U.S. District Judge Malachy Mannion and pleaded guilty to a two-count criminal information charge for faking individual income tax returns.
York County man omits over $13M from income tax returns
The Attorney’s Office for the Middle District of Pennsylvania announced that Wilcox obtained this undisclosed revenue after acquiring and selling 97 pieces of digital artwork (NFTs) from the ‘CryptoPunks’ collection of 10K unique art characters (or ‘Punks’).
Court documents and statements dated April 10, 2022, in Cumberland County, revealed that Wilcox filed a false individual income tax return for tax year 2021, under-reporting his income for tax year 2021 by roughly $8.5M, effectively reducing his tax–then due and owing–by nearly $2.1M.
On October 10, 2023, in Cumberland County, Wilcox filed another false individual income tax return for tax year 2022, again under-reporting his revenue for tax year 2022 by ~$4.5M, thus reducing his owed taxes by slightly over $1M.
The Justice Department stated on April 11 that when a taxpayer sells an NFT, including a Punk, then the taxpayer is required to report sales proceeds, including any gains or losses, from the sale of the NFT on their individual tax return. Philadelphia Field Office Special Agent in Charge Yury Kruty said the IRS Criminal Investigation is committed to unraveling complex financial fraud involving crypto and non-fungible token (NFT) transactions designed to conceal taxable income.
“In today’s economic environment, it’s more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”
The case prosecutor, Assistant U.S. Attorney David C. Williams, alleged that Wilcox paid the IRS the owed amount as restitution before reaching the agreement. Wilcox could pay up to the maximum penalty of $500K in fines if found guilty.
U.S. tightens grip on crypto-related tax reporting
The U.S. Treasury Department and the IRS previously published in the Federal Register (88 FR 59576) proposed regulations (REG-122793-19) relating to information reporting under section 6045 by brokers, including crypto exchanges. Brokers, therefore, have long been on notice that the U.S. taxman would continue to tighten the noose on crypto-related tax filing.
The proposed regulations required reporting under section 6045 for certain transactions of digital assets that were made in exchange for cash, different digital assets, stored-value cards, broker services, or property subject to reporting under existing section 6045 regulations or any other property in a payment transaction processed by a digital asset payment processor (referred to in the final regulations as a processor of digital asset payments or PDAP). The broker reporting regulations for digital assets were initially added to the Treasury Priority Guidance Plan in late 2019.
The Treasury Department and the IRS claimed they received over 44K written comments in response to the proposed regulations, although Regulations.gov indicated that over 125K comments were received. Some comments expressed support for the definition of digital asset in the proposed regulations, while others raised concerns that the definition of digital asset went beyond the statutory definition found in amended section 6045.
However, one comment recommended applying the definition only to assets held for investment and excluding any assets that were used for other functions, including, in their view, non-fungible tokens (NFTs), stablecoins, tokenized real estate, and tokenized commodities.
Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now
Read More
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