WASHINGTON — The Internal Revenue Service has begun sending “educational” letters to taxpayers with virtual currency transactions that potentially failed to report income and pay the resulting tax from virtual currency transactions or did not report their transactions properly.
For taxpayers receiving an educational letter, there are three variations: Letter 6173, Letter 6174 or Letter 6174-A, all three versions strive to help taxpayers understand their tax and filing obligations and how to correct past errors.
The IRS warned as well that it has stepped up enforcement in this area, including criminal prosecutions. Last year, the IRS launched a Virtual Currency Compliance campaign within its Large Business and International Division.
The only IRS guidance on virtual currency transactions is Notice 2014-21, under which the IRS treats cryptocurrencies as property, rather than currency, for federal tax purposes. The IRS announced that it intends to issue further guidance on the topic in the near future.
U.S. Department of the Treasury. Internal Revenue Service. (July 26, 2019). News Releases: IRS has begun sending letters to virtual currency owners advising them to pay back taxes, file amended returns; part of agency’s larger efforts (IR-2019-132). Retrieved from https://www.irs.gov/newsroom