IRS Advises Cryptocurrency Holders To Pay Back Taxes

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IRS Advises Cryptocurrency Holders To Pay Back Taxes
​The IRS is sending thousands of warning letters to cryptocurrency owners informing them that they may have incorrectly reported taxes owed.
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The IRS is sending thousands of warning letters to cryptocurrency owners, informing them that they may have incorrectly reported taxes owed on transactions involving digital currency.

Regulators identified recipients for the letters from "ongoing IRS compliance efforts." IRS officials are hoping cryptocurrency owners who receive the warnings will "amend past returns and pay back taxes, interest and penalties."

There are three different forms of the letter in circulation, based on the severity of the issue. The least severe merely requires respondents to check their taxes for inconsistencies. The most stringent notice requires taxpayers to respond under threat of an audit.

IRS Commissioner Chuck Rettig said of the letters, "The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations."

The IRS said that 10,000 taxpayers will have received the warning letters by August.