The Internal Revenue Service (IRS) has began sending out letters to crypto holders to “advise” them to pay taxes, otherwise the IRS will follow up with stiff punishments to the tax dodgers.
According to The Guardian, the IRS has sent more than 10,000 letters to cryptocurrency investors warning them that they will be “punished” if failing to pay tax on cryptocurrency revenue or report their income coming from crypto investments.
In addition, according to the Wall Street Journal, while the contents of the letter are more or less the same, the IRS is sending out three slightly different versions of the letter depending on the information they have on the crypto investor.
This is what the IRS commissioner, Chuck Rettig said regarding the IRS’ warnings:
Taxpayers should take these letters very seriously. The IRS is expanding efforts involving virtual currency, including increased use of data analytics.
The “abundance” of names of crypto holders appears to be generated from a database that contains the info on 13,000 crypto investors who have sold, bought or received digital coins worth $20,000 or more in the period 2013 – 2015.
The IRS is reportedly going to make the evasion of paying taxes from crypto investing illegal. In addition, the problem also stems from the fact that accountants are more or less unwilling to familiarise themselves with taxing cryptocurrencies or how to treat them. This also created a loophole in the system and IRS hopes to resolve this issue.
More about cryptocurrency regulation can be found in the following links: