2nd question btw. Any idea how many people are buying/selling bitcoin and have not paid taxes? I've heard it's a lot but idk what percentage of the population. Like a lot of people I know who are into bitcoin didn't even know you had to pay taxes on trades. I, like them, thought it was only when you cashed out. I heard the IRS sent a crap ton of people letter reminding them of taxes.
Also, do exchanges like coinbase automatically hand over all your info to the IRS or do they only do it upon request? Like the IRS has to call them to ask for yours in particular?
What about exchanges like foreign exchanges like kraken or kucoin? I hear they are less likely to cooperate with the US gov? Idk. anyone have much info on that?
I don't think there is anything like direct reporting to IRS that these exchanges like coinbase or BinanceUS have to do. It's only upon request that these exchanges provide details to these agencies. Scenario is different in some other countries say for example India, where now TDS or withholding tax is in place on selling cryptos, so exchanges have to mandatorily report these transactions to the government always and not only on the request of these exchanges. Foreign exchanges are obviously somewhat less cooperative but eventually, they too have to cooperate if they want to do business in a particular country because IRS violations are taken pretty seriously by any government because it's impacting the national revenues.