The IRS Is Making One Thing Crypto-Clear
Have you joined the cryptocurrency boom?
If you currently have or have had a cryptocurrency account and invest in, trade in or otherwise do business in cryptocurrencies, you must report that activity to the IRS. By the end of August, 10,000 U.S. taxpayers who have been shown to have cryptocurrency accounts will have received a letter from the IRS, educating them on the tax responsibilities and the various penalties associated with not reporting those accounts and income.
If you are among the 10,000 recipients of an IRS Cryptocurrency Education letter, you’ll be best served if you pay tax liabilities and interest expenses, and then seek abatement of penalties when assessed. As Forbes.com recently stated in an article, “Some crypto users might try to claim ignorance or argue they received terrible tax advice. Others might assert that the crypto tax rules were too vague and uncertain at the time of filing. Some tax treatment issues are still unknown, but the basics are clear. After receiving these education letters, which are warning shots, there are no grounds for continued non-compliance.”
Don’t mess around with the IRS.
If you are involved with cryptocurrencies, it’s a good idea to take this opportunity to get fully educated, review your reporting, and be sure you are tax compliant. You don’t want to go down in the IRS records as a tax evader. That is a criminal offense and as the IRS continues to clarify their position on cryptocurrencies they are sure to be penalizing (read imprisoning) some people for tax evasion.
The IRS letters are purportedly only being sent to those with $20,000 or more in cryptocurrencies. But whether you have that much or not you are required to report all transactions whether tax information statements (Form 1099) were sent, or not, for crypto accounts held in the U.S., or abroad.
If we prepared your taxes for 2018 or years prior in which you had cryptocurrencies that you want to bring to the attention of the IRS contact our office and we will help you file an amended return before the IRS gets to you.