IRS Sends 2nd Round Of Tax Warnings To Cryptocurrency Investors
The U.S. Internal Revenue Service has sent a second round of warning letters to cryptocurrency investors advising them that they have been flagged for revenue misreporting.
A number of cryptocurrency investors received the IRS CP2000 notice indicating that their returns do not match the information received from virtual currency exchanges, Bloomberg reported.
The letters acknowledge that trading exchanges, not the taxpayers, may have made the errors.
This is the second correspondence since the IRS sent over 10,000 letters to crypto investors in July urging them to pay their taxes. The second round of warning letters targeted taxpayers who the tax agency believes may have intentionally misreported crypto transactions.
Unlike the first round of warning letters, the IRS is no longer advising the taxpayers to pay up what they owe but rather indicating the specific amounts that it believes the crypto investors owe in taxes.
A letter dated July 29, seen by CoinDesk, showed that a taxpayer owed around $3,800 for the 2017 tax year. This taxpayer owed more than $3,600 in taxes alone, with another $200 or so in interest accrued.
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“The IRS is sending out these other notices and those are kind of like warning letters of varying degrees of how threatened they were,” said Chandan Lodha, co-founder of tax software provider CoinTracker.
“Basically what it says is ‘hey we have a report from one of the financial institutions you use and the amount they reported to us the IRS is different than the amount you, the taxpayer, reported and this is the amount you owe’ and it’s a 30-day letter meaning you have to respond in 30 days.”