Paul L. Caron

Saturday, July 27, 2019

IRS Cracks Down On 10,000 Cryptocurrency Owners

Wall Street Journal, IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders:

Bitcoin IRSThe Internal Revenue Service has begun sending letters to more than 10,000 cryptocurrency holders, warning they may have broken federal tax laws.

The agency wasn’t specific about the possible violations it was reviewing, but those who hold digital currencies could be subject to a variety of taxes, especially on capital gains.

“Taxpayers should take these letters very seriously. The IRS is expanding efforts involving virtual currency,” IRS Commissioner Chuck Rettig said. ...

The IRS letters come as bitcoin, the world’s most popular cryptocurrency, has ridden a new wave of optimism in recent months. In mid-July, bitcoin topped $12,000, more than three times its value at the end of 2018. Investors, speculators and Facebook have extolled the potential of digital currencies.

At the same time, use by drug dealers and other nefarious actors has marred its reputation. The IRS has expressed worries about the ability of digital currencies to promote tax evasion. ...

Jimmy Song, a cryptocurrency investor who teaches a course on bitcoin at the University of Texas at Austin, said he heard rumblings about a potential crackdown on Twitter this week.

The new enforcement “doesn’t feel good,” Mr. Song said. “It seems like an intrusive way to get people to pay and I personally don’t like it because I’m a libertarian and many people who own this are.”

According to an IRS spokesman, there is no explicit requirement that many cryptocurrency sales be reported to the agency by third parties. Sales of stock shares must generally be reported on Form 1099-B to the IRS by the brokerage firm.

Bloomberg News, The IRS Is Tracking Down 10,000 Crypto Owners to Pay Back Taxes

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