IRS Says It's Sending Warning Letters to US Cryptocurrency Owners

The IRS has begun contacting U.S. taxpayers, warning them about possible back taxes owed on their crypto holdings.

AccessTimeIconJul 26, 2019 at 4:45 p.m. UTC
Updated Sep 13, 2021 at 11:14 a.m. UTC

The U.S. Internal Revenue Service (IRS) announced Friday that it has begun sending letters to taxpayers who own cryptocurrency, advising them to pay any back taxes they may owe or to file amended tax returns regarding their holdings.

In a news bulletin, the agency said that it began mailing what it called "educational letters" last week. According to the statement, there are three variations of the letter that were sent.

The IRS further said that it will have sent such letters to "more than 10,000 taxpayers" by the end of this month," adding that "the names of these taxpayers were obtained through various ongoing IRS compliance efforts."

"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."

In May, it was reported that the IRS is beginning to work on new guidance regarding cryptocurrencies, its first such effort since 2014. A number of organizations and industry advocates have called on the agency in past years to update its guidance following its decision to treat cryptocurrencies as a form of intangible property for tax purposes.

On Thursday, a user of the r/bitcoin subreddit described receiving such a letter. Lawyer Tyson Cross, writing for Forbes, also detailed how a number of his crypto-focused clients have received this kind of letter from the IRS.

Image Credit: Mark Van Scyoc / Shutterstock

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Ignite CEO Peng Zhong Announces Departure Shortly After Re-Organization

Zhong’s exit comes weeks after the company’s former CEO, Jae Kwon, said he is re-joining the company as the CEO of spinoff New Tendermint.

CoinDesk - Unknown
2
CoinDesk - Unknown
DAOs Are the New Way of Impact Work

"Impact DAOs" are at the forefront of new culture of work that asks us to move towards aligning our values with our actions, says the co-founder of Gitcoin.

CoinDesk - Unknown
3
CoinDesk - Unknown
Sun Token
CoinDesk - Unknown
4
CoinDesk - Unknown
Secret
CoinDesk - Unknown