Cryptocurrency investors in the United States are receiving letters from the Internal Revenue Service (IRS) which are proposing backdated tax payments relating to the trade of virtual assets.
As reported by Bloomberg, some traders are receiving notices asking for input on revised tax returns, based on estimates of profit generated by cryptocurrency-related activities.
- I installed Verizon’s free junk call blocker and it seems to kind of help
- The end of snail mail: Our mail carrier robbed us and now the USPS is dead to me
- Top 10 security extensions for Google Chrome
- Def Con and Black Hat 2019: Enterprise security is stronger than ever (ZDNet YouTube)
- The era of the $200 security camera is over (CNET)
- Data breaches increased 54% in 2019 so far (TechRepublic)
The CP2000 notices have been sent in recent weeks and while they do acknowledge mistakes in past tax returns might be due to cryptocurrency platforms and exchanges rather than individuals, they do signal a clampdown by the IRS on the burgeoning industry.
In July, the tax and revenue service also sent warnings to investors to make them aware that tax may be owed on their trading activities. Some investors received demands for the disclosure of cryptocurrency trades between 2013 and 2017.
An IRS spokesperson told the publication that the latest batch of warning notices are sent to taxpayers when discrepancies between tax returns and information obtained from third parties are flagged.
“We received information from third parties such as employers or financial institutions that doesn’t match the information you reported on your tax return,” the letter reads.
Recipients can accept the changes and make any further payments required or they can challenge the IRS’ decision if they have supporting evidence.
According to the IRS website CP2000 receivers should respond within 30 days even if only to say they need more time. The notices are not straight bills or demands, but what the IRS calls “a proposal [that] informs you about the information we have received, and how it affects your tax.”
The IRS won a landmark case against Coinbase in 2017 which forced the cryptocurrency exchange to hand over the records of 14,000 customers that purchased, sold, or obtained over $20,000 in cryptocurrency between 2013 and 2015.
In July, The Group of Twenty (G20) formally backed a new set of cryptocurrency guidelines which could see similar tax chasing occur worldwide.
The international forum, including Europe, the US, and China, announced its support for a new set of Financial Action Task Force (FATF) guidelines which are designed to make money laundering through cryptocurrency more difficult. The changes would also require exchanges to hold more information on their customers for use by regulators and law enforcement when deemed necessary.
Previous and related coverage
- G20 supports proposal to make cryptocurrency exchanges hand over user data
- Coinbase drops UK support for privacy-focused Zcash cryptocurrency
- Facebook debuts Libra cryptocurrency: a Bitcoin killer?
Have a tip? Get in touch securely via WhatsApp | Signal at +447713 025 499, or over at Keybase: charlie0
- Pay IRS Back Taxes Through an Offer in Compromise
- What If? - Let's Get the IRS Perspective! Tax Questions of an Economic Downturn
- At War With IRS? Get Tax Debt Relief
- IRS Back Tax Prevention Tips For Senior Citizens
- When the IRS Telephones You
- IRS Refunds and Tax Payer's Expectations
- Criminal Tax Evasion - 3 Sure Fire Ways to Get Prosecuted
- IRS Voluntary Disclosure - Update
- Getting Tax Exempt Status For Your Organization Can Be Complicated
- How to Get Tax Relief Through the IRS Offer in Compromise Program