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- A Pennsylvania man hid $13 million in NFT income on his taxes.
- He now faces up to six years in prison.
- Authorities are targeting tax evasion involving digital assets.
A 45-year-old man from Pennsylvania, Waylon Wilcox, has admitted to underreporting millions in income from NFT sales. The income came from selling 97 CryptoPunks between 2021 and 2022. These transactions brought in more than $13 million. But none of it was included in his tax returns.
Cryptopunks were a status symbol that was digital. During the boom in NFTs, pixelated character versions sold for hundreds of thousands of dollars each. Wilcox sold 62 in 2021 for $7.4 million. He sold 35 more in 2022 for $4.9 million. Yet, on both of these years’ tax returns, he reported no digital asset sales.
His not reporting income resulted in a loss of over $3.2 million to the U.S. government in unpaid taxes. Missed taxes were estimated by prosecutors at $2.18 million for 2021 and $1.09 million for 2022. His guilty plea was accepted by the court on April 9.
CryptoPunk Prices Plunge After Peak
CryptoPunks soon gained popularity. Demand in 2021 was at an all-time high. Prices went up to over $400,000 per single NFT. But that wasn’t to last. Prices have since declined by over 85%. Some of them still command millions, however, depending on their rarity and timing in the market.
He profited enormously but did not comply with tax law. His untaxed gains are now part of a federal prosecution. Authorities point out that all digital asset earnings, such as with NFTs, must be reported. It is a crime not to.
Wilcox Awaits Sentencing in Crypto Tax Case
Wilcox awaits sentencing. He could spend up to six years behind bars. He will also have supervised release and fines. His case is being used by the government for warning purposes. Digital earnings are taxable. Disregarding that can have severe penalties.
The Internal Revenue Service is closely monitoring blockchain transactions. Agents are determined to detect tax fraud in the cryptocurrency sector. Such cases demonstrate their dedication. With digital finance accelerating, so too does the movement for compliance. This case puts a message across. Profit achieved with new technology still has to comply with outdated regulations. For Wilcox, the cost of not obeying them could be years in jail.
Related Reading: Bitcoin Reaches $84K Amid Rising Skepticism Over Government Reports
