IRS plans to send compliance letters to crypto investors

Following a press release on July 26, the Internal Revenue Service (IRS), The United States, is set to commence dispatching letters to investors in crypto in order to sort out all tax requirements for crypto tax. Following the assessment, it intends, in certain cases, to even compel defaulters to pay their taxes.

From earlier reports, data from the previous tax year showed that only 0.04% among the supposed tax filers were filing capital gains from crypto investments with the IRS.

Thus, IRS states that it will dispatch letters to about 10,000 investors among whom are: those asked to improve their tax filing, and those lawfully enforced to tax dues, and/or related charges. Furthermore, it disclosed that the dispatching should come to an end by August.

The IRS Commissioner, Chuk Rettig, maintained that the dispatch includes three different letters: Letter 6173, Letter 6174 or Letter 6174-A. Each intends to assist taxpayers to understand what is expected of them in respect to tax filing obligations. When carefully studied too, it will help them to correct errors and avoid re-occurrence.

Also, there are different reasonable doubt about IRS`s intention. Some are more skeptical about it. As captured by a report in Forbes, dated July 26 by Tyson Cross – Crypto Tax Attorney, it could be an attempt of the authority to use the taxpayers’ lists published by Coinbase in 2017 to exercise a blanket campaign.

It should be recalled that in July 2017, the service had mandated Coinbase – The United States top crypto exchange agency, to give it details of about 500, 000 users so as to contain any bid to evade tax.  It however reduced to about 14,000 users following court restriction in November, 2017. Although, the platform reported it to be 13,000 subsequently.

To support the claim, he revealed that even his clients who duly reported were served. He added that several tax professionals received Letter 6174-A despite accurate filing. However, Cross has advised investors not to be distraught if served the letter as long as they have accurate tax returns filing.

In addition, earlier this month, a claim by the agency reported that the IRS is optimistic about using the subpoenas from the Grand Jury to make firms like Apple, Google, and Microsoft yield to the checking of taxpayers’ download history on applications made for crypto activities.