IRS tells 10K taxpayers to pay up on virtual currency transactions

By TaxesFOXBusiness

Trump tweets he’s ‘not a fan’ of Bitcoin, crypto

President Trump weighed in on cryptocurrencies on Twitter.

The IRS on Friday announced it has begun sending letters to taxpayers who have engaged in virtual currency transactions, reminding them that they need to report income and pay taxes.

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"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," IRS Commissioner Chuck Rettig said in a statement. "The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations."

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The tax agency said by the end of August it will have sent letters to about 10,000 taxpayers. These individuals' names were obtained through "ongoing compliance efforts."

Last year Coinbase provided information to the IRS regarding about 13,000 users who had conducted transactions involving at least $20,000.

There are three forms of the letter, the IRS noted, which are meant to be educational and inform taxpayers how to correct past errors.

The IRS is ramping up efforts to address noncompliance, which can include audits and criminal investigations.

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Under current U.S. tax laws, cryptocurrencies are treated like property.

Taxpayers who fail to pay the taxes they owe on their virtual currency transactions can be subject to penalties and interest – in more serious cases even criminal prosecution.