The IRS is beginning to audit taxpayers with cryptocurrency assets, an agency official said. “In our exam operations, we're starting to work those cases,” Mary Beth Murphy, commissioner of the Internal Revenue Service Small Business/Self-Employed Division, said June 20 at a tax controversy forum hosted by the New York University School of Professional Studies.
She also said that SB/SE is coordinating with the agency's Large Business and International (LB&I) Division in determining how to proceed in cryptocurrency-related audits because more of those cases are cropping up.
The IRS has identified a number of cryptocurrency tax cases using its document matching program—a tool that helps detect taxpayers who under-report or fail to report their income. Murphy said the agency is preparing to send out notices to taxpayers that have been identified.
Murphy also said SB/SE is conducting work related to the Bank Secrecy Act stemming from information the IRS received in its summons on Coinbase Inc., one of the world's largest cryptocurrency exchanges.
That act requires U.S. financial institutions to collaborate with the U.S. government in cases of suspected money laundering and fraud.
New tax guidance on cryptocurrency transactions should be out soon, Murphy said, echoing prior statements from IRS Commissioner Charles Rettig.