IRS sends out 10,000 cryptocurrency tax letters

posted 10 months ago
This week the IRS announced that it is in the process of sending 10,000 letters during the next month, reminding taxpayers with cryptocurrency accounts about their tax obligations arising from such transactions. The IRS appears to be presaging a robust enforcement effort (expect some criminal tax prosecutions).

The letters come in three variations: A “soft notice” no response is required and IRS does not intend to follow up. A “less soft notice” not requiring response but with future enforcement actions. A “we know you’ve had cryptocurrency accounts” notice and requires a response; the IRS will follow up. Tax compliance may involve a substantial effort to trace and value transactions to establish cost-basis, and gain or loss for those without account statements.
Tags: bitcoin, blockchain, news