IRS Is Sending Warning Letters To Taxpayers Who Own Cryptocurrency

Fibo Quantum

More than 10,000 taxpayers who own a cryptocurrency are expected to receive what the IRS called educational letters by the end of August. The letter comes in three variations but all have the same purpose.  ( Pixabay )

The Internal Revenue Service has started to send letters to U.S. taxpayers who own a cryptocurrency. The agency is advising virtual currency holders to pay back taxes they may owe or file amended tax returns regarding their holdings.

Educational Letters

In a statement released on July 26, IRS said it has started to mail what it called educational letters to taxpayers last week. More than 10,000 taxpayers are expected to receive the letter by the end of August.

The IRS announced a Virtual Currency Compliance campaign last year to address tax noncompliance associated with use of virtual currency through outreach and examination of taxpayers. The agency said that it obtained the names of the taxpayers through various ongoing IRS compliance efforts.

‘);(playerPro=window.playerPro||[]).push(i);})();

“The IRS is expanding our efforts involving virtual currency, including increased use of data analytics,” IRS Commissioner Chuck Rettig said. “We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

Rettig said that taxpayers need to take these letters very seriously by reviewing their tax filings or, if necessary, amend their past returns and pay back taxes, penalties, and interests.

The letters also point the recipients to information on the IRS website, which include the forms and schedules they should use and where to send them.

The letter comes in three variations: Letter 6173, Letter 6174, or Letter 6174-A, but all are aimed at helping taxpayers understand their tax and filing obligations, and help them correct past errors.

Letters Being Sent To Coinbase Customers

Tyson Cross, a tax lawyer who specializes in the taxation of Bitcoin and other cryptocurrencies, said that Letter 6174-A is likely being sent to most Coinbase customers, and not just those suspected of cheating on their taxes.

“The IRS isn’t in the business of giving courtesy warnings to suspected tax cheats,” he wrote on Forbes. “This letter is probably part of a blanket mailing campaign to any individual the IRS knows has a cryptocurrency trading account.”

He said that these include more than 14,000 Coinbase users identified in the 2017 tax summons and taxpayers who received 1099 from crypto exchanges based in the United States.

ⓒ 2018 TECHTIMES.com All rights reserved. Do not reproduce without permission.