Pennsylvania Man Pleads Guilty to Tax Evasion After Failing to Report Millions in Income From CryptoPunk NFT Sales

Our story today is about a 45-year-old Pennsylvania resident who pleaded guilty to federal tax evasion after failing to report over US$13M (AU$20.6M) in income from the sale of nearly 100 CryptoPunk NFTs.

A 45-year-old Pennsylvania resident has pleaded guilty to federal tax evasion after failing to report over US$13M (AU$20.6M) in income from the sale of nearly 100 CryptoPunk NFTs.

And yes, this appears to be the first major US tax evasion case involving non-fungible tokens (as far as public records show).

Coming in hot ahead of Tax Day, the 45-year-old Dillsburg resident, Waylon Wilcox, sold 97 CryptoPunks between 2021 and 2022, amassing millions in profits.

But he didn’t declare the transactions, selling the vibrant pixelated monkeys without Uncle Sam getting a cut. In doing so, he evaded about US$3.3M (AU$5.4M) in taxes, according to the US Attorney’s Office for the Middle District of Pennsylvania.

The timing couldn’t be more symbolic and hilarious: Wilcox entered his guilty plea just ahead of the April 15 IRS tax deadline.

For those living under a coding rock, current IRS guidelines state that any sale of digital assets (crypto or NFTs) is a taxable event, and gains must be reported accordingly.

Yury Kruty, special agent in charge of the Philadelphia field office, stated:

“This case serves as a stark reminder that all taxpayers, regardless of the source or complexity of their income, have a legal and moral obligation to report their income accurately and pay the taxes due.”

The story gets even crazier.

Local outlet Daily Voice reported that while Wilcox’s girlfriend had previously turned to Facebook to request donations for her daughter’s beauty pageant expenses and asked people to “tag someone who needs to pay their taxes,” allegedly, Wilcox himself was sitting on millions in untapped NFT profits.

Oh, and to top it off, according to the outlet, the mum was reportedly planning to use the winnings to take her daughter on a trip to Disney World. God forbid a man has hobbies!

According to court documents, the reporting omissions weren’t an oversight. The IRS maintains that Wilcox willfully attempted to conceal the transactions, leading to a criminal investigation and the subsequent charges.

He now faces a maximum of six years in prison for the tax crimes, though his guilty plea is likely to earn him a lighter sentence under federal guidelines. Sentencing is yet to be scheduled.