IRS Sending Out Letter 6174-A
The IRS has begun the audit process of people they expect aren’t correctly reporting the income and tax they owe on virtual currency transactions.
The IRS recently sent out lLetter 6174-A, that states:
“We have information that you have or had one or more accounts containing virtual currency but may not have properly reported your transactions involving virtual currency, which include cryptocurrency and non-crypto virtual currencies.”
The letters inform taxpayers they may be subject to civil or criminal enforcement actions if they don’t accurately report their virtual currency transactions, according to a copy of the letter obtained by Bloomberg Tax.
The document is signed by Bryan Stiernagle, who is a senior manager in the Internal Revenue Service’s Large Business and International (LB&I) Division. This suggests the letters are part of the agency’s virtual currency compliance campaign announced last July. The division’s campaigns target specific issues pertaining to big companies and employ a range of agency resources that go beyond a traditional audit team.
The IRS was able to get its hands on information about virtual currency users through its
successful summons on Coinbase Inc., one of the world’s largest cryptocurrency exchanges. The company challenged the summons in court, but a judge in 2017 ruled in the agency’s favor.
What to do if You Receive Letter 6174-A
If you have received Letter 6174-A, you need to take action immediately. Please contact our office and we will help you determine what you need to do to get into compliance with the IRS