The IRS, the US tax collecting agency, sent tax letters to a large number of investors stating that their cryptocurrency earnings were not properly reported.
The Internal Revenue Service (IRS), which is responsible for collecting taxes in the USA, sent a warning letter to cryptocurrency investors reminding them of their obligation to pay taxes on their transactions.
The IRS, the US tax collector, has sent a warning letter to investors who are believed not to report their cryptocurrency earnings properly. An example of the letter dated August 14 was shared by CoinTracker, which produces the software that calculates the tax that crypto money investors must pay, while the following statements were used in the letter:
“We have learned that you have one or more accounts related to virtual currencies. You may not have reported all of these transactions, including crypto coins and non-crypto virtual currencies. ”
In the letter, cryptocurrency investors were informed that unreported or underreported transactions are transferred to the institution, otherwise, criminal sanctions may be incurred in the future.
3 types of letters sent
Shehan Chandrasekera, CoinTracker’s tax and strategy manager, tweeted that the letters 6171 and 6174-A are slightly more informative and telling investors what to do, while the letter number 6173 is much more serious and definitely requires a response. transferred.
While many users on Reddit stated that they received similar letters, CoinTracker stated that they did not have information about how many letters were sent.
What does the IRS demand?
“Have you bought, sold, sent to someone or made a profit from a virtual currency at any time in 2020,” the IRS told US taxpayers. He demands that they answer his question. The institution asked the same question to taxpayers last year, but this question remained in writing on a form that investors had to request themselves. The taxpayers who did not request this form or could not reach it did not deliver the necessary information to the institution, either knowingly or unknowingly. This time, the question was sent directly to the people by letter.
Where does the IRS get this information?
One of the most important questions that are curious is how the IRS reaches the information about who, how much cryptocurrency is transacted or not… CoinTracker co-founder Chandan Lodha stated that most of the people who received the letter were trading on the Coinbase exchange.
Lawsuit for “obtaining illegal information” against IRS
In 2016, the institution sent a subpoena to Coinbase to send account information (transaction and amount held) of users transacting. A user named James Harper sued the IRS last month for unlawfully obtaining personal information and violating his constitutional rights.
“They went so far as to try to abolish anonymity”
Chandan Lodha also stated that the US government has sent a subpoena to exchanges abroad such as Bitstamp or analytics software companies such as Chainanalysis, Coinbase Analytics and Palantir, saying, “They went so far as to remove even the transactions of on-chain privacy coins from anonymity.”