Crypto Tax Evasion: Man Admits to Hiding $13M in NFT Profits

Waylon Wilcox, a 45-year-old resident of Pennsylvania, has admitted to evading taxes on over $13 million in profits from selling 97 CryptoPunk NFTs. This admission comes as part of a broader crackdown on tax fraud involving digital assets. According to federal prosecutors, Wilcox sold 62 CryptoPunk NFTs in 2021, earning around $7.4 million, and an additional 35 sales in 2022, generating $4.9 million. However, he reported significantly lower income amounts to the Internal Revenue Service (IRS).

Wilcox's false tax filings were extensive. In April 2022, he filed a false return for 2021, underreporting $8.5 million in income and reducing his tax bill by about $2.1 million. He repeated this underreporting in October 2023, underreporting $4.6 million in income for 2022 and avoiding roughly $1.1 million in taxes. Wilcox intentionally answered “no” when asked if he engaged in digital asset transactions, despite his active involvement in buying and selling 97 CryptoPunk NFTs.

Wilcox pleaded guilty to two counts of filing false returns on April 9. These charges carry a maximum sentence of six years in prison, supervised release, and fines. However, a sentencing date has not yet been set. The IRS Criminal Investigation division remains dedicated to uncovering complex financial schemes involving virtual currencies. Since January 2024, centralized crypto exchanges have been required to report users’ sales and trades to the IRS.

This case highlights the increasing scrutiny on digital asset transactions and the importance of accurate tax reporting. The IRS's efforts to enforce tax compliance in the crypto space are part of a broader strategy to ensure that all income, including that derived from digital assets, is properly reported and taxed. The case of Waylon Wilcox serves as a reminder to individuals and businesses involved in the crypto market to adhere to tax laws and regulations to avoid severe legal consequences.

The case of Waylon Wilcox is a significant development in the IRS's efforts to combat tax evasion in the digital asset space. The IRS has been increasing its scrutiny of cryptocurrency transactions, and this case represents one of the earliest major prosecutions of its kind. The IRS's efforts to enforce tax compliance in the crypto space are part of a broader strategy to ensure that all income, including that derived from digital assets, is properly reported and taxed.

The case of Waylon Wilcox serves as a warning to individuals and businesses involved in the crypto market. The IRS's efforts to enforce tax compliance in the crypto space are part of a broader strategy to ensure that all income, including that derived from digital assets, is properly reported and taxed. The case of Waylon Wilcox serves as a reminder to individuals and businesses involved in the crypto market to adhere to tax laws and regulations to avoid severe legal consequences.