IRS Focusing on Bitcoin ATMs

IRS Investigating Tax Issues of Cryptocurrency Kiosks Criminal investigators at the Internal Revenue Service are extremely focused on the potential tax issues concerning cryptocurrency kiosks and Bitcoin ATMs, a top agency official said recently.  Although no public cases involving bitcoin or other crypto kiosks have been filed to date, IRS Criminal Investigation Chief John Fort said his team is working with its law enforcement partners to police the illicit activity enabled by the technology. “We’re … Read More

IRS Cryptocurrency Guidance to Focus on Information Reporting

The IRS’s next round of crypotcurrency guidance will likely focus on information reporting, the agency’s toplawyer said. “It’s no mystery that when you have any kind of information reporting your level of compliance increases dramatically,” IRS chief counsel Michael Desmond said Oct. 17 during a Washington event hosted by the Tax Policy Center. The first priority will be guidance under tax code Section 6045, which lays out information reporting requirements for brokers. The tax code … Read More

2019 Draft IRS Tax Form Asks About Cryptocurrency

IRS 2019 Draft IRS Tax Form Asks About Cryptocurrency The IRS is specifically asking taxpayers about their virtual currency transactions in the latest draft of a form forreporting certain types of income. “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” This is the question the IRS asks on the latest draft of the 2019 Form 1040 Schedule 1 released Oct. 11. Taxpayers … Read More

Crytpocurrency Hard Fork Explained

The IRS recently came out with Rev. Rul. 2019-24, which helps explain the following questions: Does a taxpayer have gross income under § 61 of the Internal Revenue Code (Code) as a result of a hard fork of a cryptocurrency the taxpayer owns if the taxpayer does not receive units of a new cryptocurrency? Does a taxpayer have gross income under § 61 as a result of an airdrop of a new cryptocurrency following a … Read More

Cryptocurrency tax guide

The IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers. The IRS will remain actively engaged in addressing non-compliance related to virtual currency transactions through a variety of efforts, ranging from taxpayer education to audits to criminal investigations. The Internal Revenue Service began sending letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the … Read More

Crypto Holders May Hear from IRS Even if They Don’t Owe Tax

Some cryptocurrency investors have started to receive notices from the Internal Revenue Service because what they reported on their tax returns doesn’t match information the agency is getting from third parties, such as exchanges. The mismatch notices—called CP2000 notices—inform taxpayers that discrepancies have been detected and ask them to justify the positions they took on their returns.  For cryptocurrency investors, the mismatches often occur because a handful of virtual currency exchanges are providing information to … Read More

IRS Sends Second Letters to Cryptocurrency Holders

Some cryptocurrency investors are receiving a second letter from the Internal Revenue Service telling them that their federal tax returns don’t match the information received from virtual currency exchanges, a new approach in the agency’s increased monitoring of the industry. The letters acknowledge that trading exchanges, not the taxpayers, may have made the errors. The letters are a fresh signal that the IRS is increasing its focus on cryptocurrency tax compliance, after first being slow … Read More

IRS Letters 6173, 6174 and 6175

The IRS is sending out letters 6173, 6174, and 6174a to advise taxpayers of their tax obligations with respect to transactions involving virtual currency, which includes crypto-currency and non-crypto virtual currencies. IRS Letter 6174-A advises the taxpayer that the IRS has information that the taxpayer had one or more accounts containing virtual currency but may not have properly reported any transactions properly. The letter advises the taxpayer to file an amended or delinquent return, write … Read More