IRS Treatment of Virtual Currency
For federal tax purposes, virtual currency is treated as property and transactions involving virtual currency are subject to the same rules generally applicable to other sales or exchanges of property. Taxpayers who have sold virtual currency, used virtual currency to pay for goods or services, or received virtual currency as payment, are required to report their transactions to the IRS and pay any resulting tax.
To discuss your case with an experienced tax attorney, contact the dual-licensed attorney-CPAs, tax attorneys, and tax professionals at the law firm of Daniel Rosefelt & Associates, LLC at (301) 656-4424 or reach out by completing our ten-second contact form.
Increased IRS Enforcement of Virtual Currency Compliance
Contrary to the beliefs of many, the use of virtual currency, such as Bitcoin or other cryptocurrencies, is not anonymous and Virtual Currency Compliance has become a major enforcement priority for the Internal Revenue Service (IRS). Using data analytics, the IRS has increased its efforts to identify taxpayers with virtual currency transactions who may not have complied with the tax obligations.
The IRS recently announced that it has begun sending warning letters to potential noncompliant taxpayers. By the end of August 2019, the IRS will have sent letters to more than 10,000 suspected of virtual currency noncompliance. Taxpayers who have failed to properly report and pay tax on virtual currency transactions are strongly encourage to file or correct their tax returns and pay any tax due. Taxpayers who fail to comply with their legal obligations with respect to virtual currency transactions risk increased IRS enforcement. Such enforcement can include audit, tax penalties and interest, and even criminal prosecution.
Don’t Wait Until It’s Too Late
Have you received a letter from the IRS regarding unreported virtual currency transactions? Is failure to report your virtual currency transactions keeping you up at night? If so, contact the dual-licensed attorney-CPAs and tax attorneys at the law firm of Daniel Rosefelt & Associates, LLC, at (301) 656-4424 or reach out by completing our ten-second contact form to know your real options. We serve clients in the U.S. and around the world from our offices in Bethesda, Maryland.