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Is The IRS Cracking Down On Cryptocurrency?

Tech
0 min read

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The IRS is cracking down on bitcoin and other cryptocurrency holders who haven’t reported earnings or paid taxes on trades. In August, about 10,000 bitcoin owners will receive letters from the IRS requiring payment on any unreported cryptocurrency trades. IRS established a Virtual Currency Compliance Campaign addressing issues related to noncompliance on cryptocurrency. The Virtual Currency Compliance campaign focusses on “noncompliance related to the use of virtual currency through multiple treatment streams including outreach and examinations. The compliance activities will follow the general tax principles applicable to all transactions in property, as outlined in Notice 2014-21. Taxpayers with unreported virtual currency transactions are urged to correct their returns as soon as practical.” IRS has conducted ongoing compliance investigations to find cryptocurrency holders and sent previous initial educational letters to taxpayers. Chuck Rettig, the IRS Commissioner stated, “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.” Last year, a court order for Coinbase, a cryptocurrency exchange platform, required the turnover of information to IRS, on around 14,000 accounts. The IRS targeted accounts on Coinbase who purchased or had sales of more than $20,000 worth of cryptocurrencies between the period of 2013 to 2015. The IRS had only received about 900 filing reports relating to cryptocurrency transactional gains or losses even though a large majority of Americans use regulated cryptocurrency exchanges such as Coinbase.

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