IRS Will Not Be Likely to Waive Penalties if You Have Received a Letter
Individuals who received letters from the IRS recently should take the agency’s warnings seriously about reporting their cryptocurrency assets.
Failure to take the letters seriously could mean big penalties down the road, said Evan Fox, practice leader in the Digital Asset Advisory Services group at Berdon LLP in New York.
“The IRS likely after this will not be lenient if they happen to catch people.” The agency in July began sending letters to more than 10,000 cryptocurrency users suspected of failing to report or misreporting their digital assets.
The letters warn of potential civil or criminal enforcement action if the assets aren’t properly disclosed to the Internal Revenue Service.
There are traditionally many ways taxpayers can avoid penalties when they’ve failed to file or pay their taxes on tim. As an example, they can prove they had reasonable cause or that this is their first offense.
But now that the IRS has directly warned cryptocurrency users, it’ll be harder for them to justify getting penalty relief.
People Knowingly Not Reporting Taxes Should consider Voluntary Disclosure
Even if you have not received a letter from the IRS (yet), you should consider coming forward to get into compliance. “The more the IRS publicizes an issue, the less likely it is to buy the argument that ‘I really didn’t know,’” said Bryan C. Skarlatos, a partner at Kostelanetz & Fink LLP in New York.
Contact Freeman Tax Law
The Attorney's and CPA's at Freeman Tax Law have an abundance of experience in dealing with complicated cryptocurrency tax issues. Please contact us if you would like to discuss your personal tax situation. The first consultation is free, and of course, confidential.