The IRS Is Coming After Those Who Have Not Reported Their Crypto Income!
The IRS Is Coming After Those Who Have Not Reported Their Crypto Income!
The IRS recently began sending letters to crypto investors informing them that they may owe taxes on unreported earnings and that they should file amended returns. The crypto community took notice.
We have known for quite a while about the IRS’s big victory in their petition for an order to authorize a “John Doe” summons to Coinbase for information related to transactions in cryptocurrency. Seeing as the IRS was granted access to the name, date of birth, address and taxpayer IDs of Coinbase users who either bought, sold, transferred or received more than $20,000 worth of crypto during 2013-2015, these letters should not have come as a big surprise.
The IRS letters (Letter 6173, Letter 6174, and Letter 6174-A) are all different in nature, but they all begin the same way: “We have information that you have or had one or more accounts containing virtual currency.”
If you have previously reported your crypto activity, you may still have received one of these letters. Although you may believe that you accurately reported the income from your crypto investment activity, we still suggest that you review your prior year returns and make sure that the income was properly recorded.
For those of you who have not accurately reported your crypto trades, or even worse, those who have never reported any crypto activity, you should make sure that you follow the IRS instructions and amend your tax return to get your filings up to date and in compliance.
As our founder, Jordan Bass, CPA stated in the recent Wall Street Journal Article: IRS to Cryptocurrency Owners: Come Clean, or Else!, “The IRS isn’t going to impose terrible penalties on good-faith efforts, but it will try to make an example of bad actors.” After receiving one of these letters from the IRS, taxpayers pleading ignorance for their lack of reporting will be much harder to defend.
If you need any help getting your crypto tax issues in order, schedule a free 20 minute consultation today! Our team has reconciled millions of transactions and knows what to do to not only get you in compliance, but keep you in compliance.
