US Internal Revenue Service Sends Letter to Crypto Holders

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August 20, 2019 – The US Internal Revenue Service began sending letters to US taxpayers with digital currency transactions who failed to report their income and pay taxes or who do not report their transactions properly. 

According to the agency, by the end of August, more than 10,000 taxpayers will receive the letters. It will be obtained through the various ongoing IRS-Compliance efforts. According to the head of the IRS Commission Chuck Rettig’s statement;

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest, and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

What are versions of the IRS letters?

Three versions of the IRS missive Letter 6173, Letter 6174 or Letter 6174-A the contents of the letters point out their tax and filing obligations and how to remediate past errors. Taxpayers in the United States refer to information on including which forms and schedules to use and where to send them. While recipients of the IRS letter are on notice, the IRS perceived they may need to report. The call to action seeks what is reported and fix whatever is missing on the report.

On the other hand, taxpayers who don’t receive one of the above IRS letters should consider following the same process.

The following amendments on the tax report are clearly explained with three presumptions;

  1. Amending tax return to ask for big tax refunds is a well-known audit trigger;
  2. Amending to report extra income and pay extra tax is usually much less and will give a head off tax audit problems.

Digital currency is an ongoing focus area for IRS criminal investigation. For reference, last year IRS announced a  Virtual Currency Compliance campaign to address tax noncompliance related to the use of digital currency through outreach and examinations of taxpayers. The IRS says it will remain actively engaged in addressing noncompliance related to digital currency transactions through a variety of efforts, ranging from taxpayer education to audits and criminal investigations.

This article is first published on BitPinas: US Internal Revenue Service Sends Letter to Crypto Holders

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Raquel Marasigan

    A graduate student of Applied Business Analytics at the University of Asia and Pacific, Raquel’s interest is to bring together innovators, the public, and the government to advance their understanding of cryptocurrency in financial markets Her advocacy leans towards the adoption of blockchain technology that will help Filipinos to be the global change maker through article content [telegram @raqs]