IRS plans on going after crypto holders for taxes
The taxman cometh for 10,000 crypto enthusiasts
Uncle Sam wants you. Unfortunately, it’s not to defend the country this time, though. The IRS is reportedly beginning to send out letters to taxpayers who have been involved in the trading of digital currencies. The goal is to get the individuals to cough up their tax obligations on any crypto holdings. Over 10,000 letters are expected to be sent before the end of August.
According to IRS Commissioners Chuck Rettig, “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.”
The IRS asserts that crypto is property and, as such, is governed by property tax laws. Many crypto enthusiasts have been under the false impression that their activity was not detectable by authorities, but this is a fallacy. Not only has the IRS been working with tech companies to track down crypto users through their browser histories, Coinbase was ordered to hand over details of thousands of accounts to the IRS last year.
Rettig adds, “The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations.”
Social media is already beginning to see signs of people receiving the letters. There are reportedly three different types of communication being delivered by the IRS. The first is basically a notice to file an amended tax statement (in other words, a gentle hint), the second is a notice about the importance of complying with tax laws (a hint that isn’t as subtle) and the third is a notice that essentially orders the recipient to pay now or deal with the agency’s wrath.