IRS, Ignoring Its Own Watchdog, Sends Letters About Crypto Taxes Once Again
Less than a year has passed since the IRS first sent taxpayers cryptocurrency "soft letters."
Aug 25, 2020 at 10:16 p.m. UTCUpdated Aug 19, 2021 at 3:54 a.m. UTC
:format(webp)/cloudfront-us-east-1.images.arcpublishing.com/coindeskuat/RRVCNZNCD5E7BIXNKP6BFDB56A.jpg)
Undeterred by its own watchdog's warnings, the Internal Revenue Service has once again begun sending crypto "soft letters" of disputed legality to American taxpayers.
- The letters, which broadly inquire about unpaid or incorrectly filed crypto taxes, appear to have been sent out en masse to an unknown number of taxpayers on Aug. 14, according to multiple copies of the letter reviewed by CoinDesk.
- They're part of what the IRS calls a "soft letter" campaign, a call-to-action meant to spur taxpayers to fix alleged discrepancies in their tax filings before the IRS escalates the situation to a full inquiry - an audit.
- Crypto holders in particular face reams of sometimes still developing tax guidance over how to treat hard forks, report capital gains, account for crypto transactions and other more commonplace issues, like neglecting to file.
- But when the IRS first rolled out crypto soft letters last September, it may have gone too hard, too fast, according to the Taxpayer Advocate Service.
- The internal watchdog recently alleged that one particular letter variant (6173) "undermines" taxpayer rights by demanding a statement of facts and a detailed trading history accounting for years outside the statute of limitations. Letter 6173's "disturbing" tone also elicited criticism from the Advocate.
- Taxpayer Advocate Erin Collins alleged in a report to Congress that letter 6173 violated laws governing IRS conduct and called upon the agency to make changes. The IRS refused.
- It now appears that 6173 is back in nearly identical fashion. A copy of the letter shared with CoinDesk parrots its predecessor's tone and demands. The IRS did not immediately respond to a request for comment.
- The taxpayer who shared his letter with CoinDesk indicated he received the letter because he had not yet filed his 2019 returns.
STORY CONTINUES BELOW
13:18
Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
05:10
Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
04:07
The first video of the year 2024
40:07
The last regression video of the year 3.67.0
:format(webp)/downloads.coindesk.com/arc/failsafe/user/1x1.png)