New IRS Notice Could Be Trouble For Crypto Investors but Revenue Service Says It’s Not An Audit
The U. S. Internal Revenue System (IRS) has recently posted a new video on social media talking about the CP2000 notices it sent to people who did not pay their taxes as they should. This has troubled crypto investors, as most of them did not know how to pay their taxes due to lack of clarity from the IRS.
— IRS (@IRSnews) August 25, 2019
While the CP2000 notice is not really directly related to crypto, many crypto investors are bound to be affected by it because of a single fact: the IRS expects them to magically know all the rules. The crypto tax legislation in the U. S. is quite confusing and old. Because of this, people often report it wrong.
Several exchanges divulge the information of its clients with the U. S. without ever informing them, so they may receive a letter if their tax filings do not match what was expected. Not many people know, but the law requires U. S.-based exchanges to do it.
According to the IRS, CP2000 notices are not audits, but they work in a similar way and people still have to answer them within 30 days. They may contest what is in the letter, but they will have issues if they choose not to respond to it. If someone just ignores the letter, the person will receive a CP3219A letter, also known as a statutory notice of deficiency.
Unfortunately, while the IRS does not decide to create a clearer regulation to determine how cryptos work, crypto taxes will still be too complicated. Because of this, investors will possibly continue to receive these ominous letters.