The U.S. Internal Revenue Service (IRS) announced Friday that it has
begun sending letters to taxpayers who own cryptocurrency, advising them
to pay any back taxes they may owe or to file amended tax returns
regarding their holdings.
In a news bulletin,
the agency said that it began mailing what it called “educational
letters” last week. According to the statement, there are three
variations of the letter that were sent.
The IRS further said that it will have sent such letters to “more
than 10,000 taxpayers” by the end of this month,” adding that “the names
of these taxpayers were obtained through various ongoing IRS compliance
efforts.”
“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,” IRS Commissioner Chuck Rettig said in a
statement. “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.”
In May, it was reported
that the IRS is beginning to work on new guidance regarding
cryptocurrencies, its first such effort since 2014. A number of
organizations and industry advocates have called on the agency in past
years to update its guidance following its decision to treat
cryptocurrencies as a form of intangible property for tax purposes.
On Thursday, a user of the r/bitcoin subreddit described receiving such a letter. Lawyer Tyson Cross, writing for Forbes, also detailed how a number of his crypto-focused clients have received this kind of letter from the IRS.
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