The cryptocurrency industry may still be going strong, but that doesn’t mean it hasn’t had its share of problems. Nor does it mean everyone is a fan of virtual currencies. The IRS certainly isn’t, and crypto investors have learned that the hard way the past two months.
Here’s what we know.
IRS has Words for Crypto Investors
At the start of last month, the IRS began mailing more than 10,000 crypto investors informing (well, it was more of a warning) that they may owe taxes on various cryptocurrency transactions.
This week, word has come out that crypto investors are receiving further letters from the IRS; these letters are warning them that their federal taxes do not match the information brought forward by cryptocurrency exchanges. One upside is that the IRS recognizes that it’s the crypto exchanges that may have made errors, not the taxpayers.
Still, these letters, which crypto investors have been receiving the past few weeks, is yet another indication that the government is focusing on crypto tax compliance, and that they maintain their belief that cryptocurrencies are a “significant threat” to tax collection, as described by the IRS’s top criminal chief.
Interestingly, you can see the letters on the IRS’s website. They state the following: “We received information from a third party (such as employers or financial institutions) that doesn’t match the information you reported on your tax return.” The letters add: “this discrepancy may cause an increase or decrease in your tax, or may not change it at all.”
What This All Means
Most people know cryptocurrencies have their share of problems and illegal activity. They are volatile, but they can also bring great fortune to those who invest correctly. Same goes for penny stocks. But when things like this happen, one has to question the legality of virtual currencies. Now, however, I suppose we will see further action being taken in terms of legality, with the IRS announcing they will soon declare criminal tax evasion cases.
Do you have any thoughts on the IRS sending letters to crypto investors? Let us know your thoughts in the comments below.
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