Virtual Currency Owners: Be on the Lookout for IRS Letters!
The IRS has started sending out educational letters to taxpayers with virtual currency transactions that have possibly failed to report income and pay the tax from the virtual currency transactions or did not report their transactions properly.
There are three variations of the letter: Letter 6173, Letter 6174 and Letter 6174-A. These letters are intended to help taxpayers understand their tax and filing obligations and how to correct past errors. By the end of August 2019, more than 10,000 taxpayers will receive these educational letters. The taxpayers were obtained through ongoing IRS compliance efforts.
The letters are sent to taxpayers to encourage them to review their past tax filings, possibly amend returns where appropriate, and/or pay back taxes, interest and penalties. There will be additional information on IRS.gov, which will include forms and schedules to use and where to send amended returns or tax due amounts.
The letters are part of the IRS’s Virtual Currency Compliance campaign, which looks toward improving compliance in this area through taxpayer education, audits, and criminal investigations.
While additional legal guidance related to this situation is being worked on by the IRS, the Barnes Dennig tax team would be happy to answer questions or discuss a letter you may have received. Please feel free to contact a member of our team to further discuss the virtual currency transaction letters, or call 513-241-8313 to speak with a member of our tax team.