IRS Is Sending “Educational” Letters To Virtual Currency Owners Advising Them To Report Crypto Transactions Properly And Pay Tax

Cole Schotz
Contact

Cole SchotzIn a news release on July 26, 2019, the IRS announced that it was sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax.  See IR-2019-132.

The announcement is an indication of increased IRS collection and enforcement activity in the area of virtual currency.  The IRS recently received information about approximately 13,000 taxpayers with virtual currency transactions through a subpoena of the virtual currency exchange, Coinbase.  The IRS expects to send letters to more than 10,000 taxpayers by the end of August.

For taxpayers receiving a letter from the IRS, there are three variations:  Letter 6173, Letter 6174 or Letter 6174-A.  The IRS has previously released Notice 2014-21, which explains that the IRS treats virtual currency as property for federal tax purposes, and discusses the tax treatment of the sale or exchange of virtual currency and mining operations.

The news release also states that taxpayers who do not properly report the income tax consequences of virtual currency transactions may be liable for tax, penalties and interest.  In some cases, taxpayers could be subject to criminal prosecution.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Cole Schotz | Attorney Advertising

Written by:

Cole Schotz
Contact
more
less

Cole Schotz on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.