The IRS has begun sending letters (Letters 6173, 6174, and 6174-A) to taxpayers who:
- Potentially failed to report income and pay the resulting tax from virtual currency transactions
- Did not properly report virtual currency transactions.
The letters are for educational purposes only and direct taxpayers to review their tax filings; amend returns where appropriate; and pay any back taxes, interest, and penalties. Virtual currency plays a major role in IRS Criminal Investigations.
IRS Commissioner Chuck Rettig said: “Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,”
According to the IRS, more than 10,000 taxpayers will receive these letters by the end of August. The letters are part of the IRS’s Virtual Currency Compliance campaign, which seeks to boost compliance in this area through taxpayer education, audits, and criminal investigations.
IRS Notice 2014-21 (PDF) states that virtual currency is property for federal tax purposes and provides guidance on how general federal tax principles apply to virtual currency transactions.
The IRS anticipates issuing additional legal guidance on virtual currency in the near future.
Copyright © 2019 Thomson Reuters/PPC. All rights reserved.