Facts are important in matters of law, Joe.

The Federal Reserve Board is a private entity whose members are appointed by presidents. The twelve Federal Reserve Banks are private entities. They are not foreign-owned, but you may mean that foreigners hold a majority portion of the US public debt.

The IRS is an agency of the Treasury Department that expanded from its first commission in 1862. The Fed, the IRS, and the income tax are Constitutional both according to the Supreme Court and according to the common man's reading of the statutes. The nature of the scheme behind them is slightly complex and so I don't comment on the details without evidence of interest.

Do you mean you get penalized if you gained income and didn't report it? That is true but if no gain is involved there is no duty to report income. The question I asked is about, if digital currency increases in value to me, what triggers the duty to report that? You appear unaware of US tax law, and you might be in for quite the awakening if you were interested.

Your answer was mistaken on two counts. If the government withheld money on your behalf and owes you, that is not a trigger of duty to report, you could just ignore it. That is a big part of the scheme, convince workers to give up federal withholding and then feel good about getting part of it back maybe. During the War of 1812 when Congress considered an income tax they realized it would be silly to collect and pay out the same money and voted against it, but they got greedier later.

Secondly, owing money cannot be a trigger of duty because you don't owe the money until you self-assess that it is owed, which self-assessment is the filing of the return itself. (If someone else assesses, it's because you missed the first trigger.) So I invite you to think about what actual event triggers the duty to file a return, which any accountant can tell you. It's not the purchase or sale of digital currency, nor withholding, nor a statement of debt, but you are free to keep playing.