The U.S. Internal Revenue Service (IRS) sent out new letters to cryptocurrency investors suspected of incorrectly reporting cryptocurrency revenue.
The IRS has launched a new campaign against cryptocurrency traders. In new letters received by some cryptocurrency investors, the Tax Service notes that traders reported the wrong amount of income from cryptocurrency transactions.
According to one letter handed over to CoinDesk, the taxpayer owes nearly $ 4,000 for the 2017 tax year. This taxpayer owed more than $ 3,600 in taxes, and another $ 200 in interest. The letter was dated July 29, 2019.
CoinTracker co-founder of tax software provider Chandan Lodha said the IRS is sending CP2000 notifications to some of its clients saying that traders did not report all of their cryptocurrency earnings.
“In essence, the IRS states in a letter:“ We have a report from one of the financial institutions that you use, and the amount they reported to us is different from the amount that you, the taxpayer, reported, and here is the amount you owe “. In addition, an answer to this letter must be given within 30 days. “
According to Lodha, CP2000 was used outside the cryptocurrency industry for other forms of unaccounted income. However, for the industry, “this is definitely a new phenomenon that is only gaining popularity.” Lodha added that transfers from the exchange to another wallet should not be taxed, but the exchange can still report these transactions.
According to the IRS website, the recipient of the letter must respond to it regardless of whether he agrees with the tax assessment or not. Those who disagree with the assessment should ask the financial institution to submit a revised statement.
According to a letter sent by CoinDesk, the recipient informed the IRS of zero revenue from cryptocurrency transactions in 2017. However, information obtained through Coinbase indicates that he should have reported income in excess of $ 12,000.
Late last month it became known that the IRS was sending out
letters demanding the payment of taxes on cryptocurrency income. It has also recently been reported that the U.S. Internal Revenue Service plans to develop more sophisticated ways to track traders who shy away from cryptocurrency revenue taxes. In addition, in May of this year, the IRS announced plans to issue new cryptocurrency tax recommendations.