The IRS’s new academic study provides a rare look at who is reporting cryptocurrency activity for tax purposes: Crypto sellers skew younger, report lower taxable income, are less likely to itemize deductions, and display trading behavior broadly associated with retail investors versus sophisticated crypto-whales.
The study offers insight into why retail traders may dominate reported crypto activity: the virtual currency checkbox on tax returns. After the IRS added the checkbox, reporting increased most noticeably among self-prepared filers. Perhaps those receiving professional tax advice, who aren’t being exposed to the checkbox, aren’t receiving adequate guidance from their preparer. Or maybe some taxpayers see less risk in neglecting to report their crypto earnings to their accountant.
The findings also broadly suggest the IRS’s current crypto reporting system may be disproportionately capturing lower-income and less sophisticated retail traders but missing a meaningful share of higher-income and sophisticated activity. That raises a familiar risk in tax administration—enforcement pressure settling around the most visible and compliant rather than toward the areas of greatest potential noncompliance.
None of this implies retail crypto traders are doing anything wrong, or even that higher-income traders are necessarily intentionally evading tax. The study does, however, redraw the compliance map. If the IRS wants to enforce crypto reporting both effectively and equitably, it should target the parts of the crypto market that remain in the shadows rather than the taxpayers who are already reporting.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts examined the upcoming tax filing season, Hawaii’s cruise ship tax, and more.
The Exchange —It’s where great ideas on tax and accounting intersect.
Insights
IRS Upheaval Makes Patience and Tech a Tax Pro’s Best Friends
The 2026 filing season will test taxpayers and practitioners with service shortfalls and evolving compliance requirements. Taxpayers and practitioners who act early will be best positioned to navigate these challenges.
Hawaii Cruise Ship Tax Survives, but Its Voyage Will Be Stormy
Although the Hawaii cruise ship tax will proceed as planned, it remains susceptible to challenges. This, along with the harm it could inflict on the state’s economy, raises questions about the tax’s long-term future.
Treasury’s Foreign Tax Notices Mask Growing Detrimental Policies
Three new sets of regulatory guidance from the Treasury Department sharply contrast to the deregulatory, anti-tax approach that the administration has taken in 2025.
2025 Highlights
Read the Top 5 International Tax Insights of 2025
Here are five of our most popular articles on international tax developments that give expert insight for tax professionals.
Read the Top 5 Transfer Pricing Insights of 2025
Here are five of our most popular Bloomberg Tax Insights on transfer pricing, covering the interaction of transfer pricing and tariff volatility, possible strategies for multinational companies, and how countries scrutinized and regulated transfer pricing in 2025.
Read the Top 5 Business Tax Management Memo Articles of 2025
This is Bloomberg Tax’s roundup of the top five business Tax Management Memorandum articles of 2025.
Read the Top 5 Tax Management International Articles of 2025
Read Bloomberg Tax’s roundup of the top five Tax Management International Journal articles of 2025.
Columnist Corner
A retrospective is a great opportunity to look at the ideas that have stayed the course throughout the year, writes Andrew Leahey in his Technically Speaking year-end roundup.
From the 2025 tax-and-spend package, to the capital gains loophole, to closing the tax gap, the fact that these arguments still matter “says less about the columns themselves and more about the persistence of the problems they tackle,” Andrew says, noting that experience can help correct earlier logic. Read More
News Roundup
Three State and Local Tax Cases Practitioners Must Watch in 2026
Next year has the potential for landmark state and local tax decisions that affect the broader legal landscape in addition to the discrete tax issues they address.
Dubious IRS, Resolute Claimants Fuel Conservation Easement Cases
The IRS isn’t showing any signs of backing down from its skeptical attitude toward conservation easements, and practitioners expect that next year even more legal battles over the deduction will further clog the US Tax Court’s docket.
NYC Aims to Open More Child Care Centers With Bigger Tax Break
New York City lawmakers hope more landlords will make space for day cares and early education centers in their buildings after boosting a tax credit for expanding enrollment.
Overseas Crypto Sales Deduction Imperiled by GOP Tax Law Change
A small change made by the $3.4 trillion Republican tax-and-spending law is putting a lucrative tax deduction at risk for certain kinds of digital assets sold overseas, and tax professionals are looking to the IRS for answers.
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