As the IRS sends out its warning letters to Crypto traders and the industry waits for the IRS’ final report, many are commenting on what the letters could mean in regard to the final tax guidance.
An interesting article from CoinDesk, IRS Warnings to Bitcoin Traders Offers Clues to Coming Tax Guidelines, provides some insight on what the recent IRS warning letters to Crypto traders may be implying about the upcoming tax guidelines.
The IRS’ recent warning letters to 10,000 traders offer hints at what its forthcoming guidance on crypto taxes might say.
While the letters are not guidance, the tea leaves indicate the IRS might be changing its required methods for calculating the value of crypto holdings and the forms and schedules for reporting them.
Major questions remain unresolved, including how hard forks and airdrops should be treated. 1
And in an article in Financial Planning, Crypto tax avoiders face IRS roulette: Fess up or try hiding , the authors address how the IRS is making cryptocurrency taxation a priority and some of the ramifications of non-compliance.
But cryptocurrency tax compliance is now a priority. IRS criminal chief Don Fort has described digital and virtual currencies as a “significant threat” to tax collection and said the agency will soon announce criminal tax evasion cases involving them. In 2017, the IRS won a lawsuit that required digital currency exchange Coinbase to hand over data on customers who bought or sold at least $20,000 in cryptocurrency during any year from 2013 to 2015.2
While the industry awaits the final guidelines from the IRS, firms need to start preparing to deliver cost basis and tax reporting solutions to assist their customers with compliant reporting. Maxit E2E is the only end-to-end tax information reporting solution for cryptocurrency. Contact us to learn more.
1CoinDesk, August 12, 2019 IRS Warnings to Bitcoin Traders Offers Clues to Coming Tax Guidelines
2Financial Planning, August 13,2019 Crypto tax avoiders face IRS roulette: Fess up or try hiding