IRS Source: Cryptocurrency Holders and Traders to be Audited by US Tax Collection Agency
A trusted source has confirmed that the Internal Revenue Service is going to conduct audits on cryptocurrency activities. The source said that the tax collection agency is planning to unleash a batch of audit notices. These new notices will be follow-ups to 10,000 letters that were initially sent in August.
The IRS has been focusing their attention on the cryptocurrency industry, and soon, audits will be done in the industry. Not many Americans were sure of what was entailed in the 10,000 letters sent in August.
However, multiple reports emerging show the IRS is increasing its review and investigations on substantial crypto investors. A statement by BeInCrypto stated that there was a new checkbox on 1040 form that asked individuals to avail information on whether they had exchanged, sent, or received any digital currency since 2013.
It was also well noted that failure to answer that question with utmost honesty would be a criminal offense. Many people were amazed because not only did this kind of study target the traders, but the holders also seemed to be a target here.
Audit Notices to Crytpo Users
Crypto Tax Girl reported that Judith McNamara who works with the IRS confirmed that the tax collection agency is going to send more audit notices. It is, however, uncertain whether everyone who received the August letter will secure an audit notice for the second time.
Per Judith McNamara of the IRS, based on new data that the IRS has, it will likely be sending out more audit notices soon in addition to the initial 10,000 letter campaign that was sent out in August.
— Crypto Tax Girl (@CryptoTaxGirl) October 23, 2019
Letters sent out in August differed in what they required the recipients to do. Some were a kind of notification that the IRS was aware they were holding the cryptocurrency. Other letters demanded a proper response from the recipients and immediate action. This time around, however, it is expected that audit letters will dictate that there must be a response to the letter.
The IRS has been heavily criticized for using the old laws on new concepts and technologies such as cryptocurrencies. Clearly, the IRS is not welcome in the digital currencies space.