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IRS focus on virtual currency transactions

By the end of August 2019, the Internal Revenue Service ("IRS") intends to have issued 10,000 letters to taxpayers suspected of misreporting virtual currency transactions.

Included within the scope of ‘misreporting’ is a failure to declare virtual currency transactions in tax returns filed with the IRS.

This campaign was launched personally by Chuck Rettig, the IRS Commissioner. He emphasised its seriousness with the following words:

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties.”

Three varieties of letter will be issued, all of which begin with the heading ‘Reporting Virtual Currency Transactions’. There is anecdotal evidence that some of the letters had been mailed prior to the formal launch of the campaign on July 26, 2019.

Three varieties of letter will be issued, all of which begin with the heading 'Reporting Virtual Currency Transactions'.

The three letters differ in tone and approach; from an outright request for a tax return to report virtual currency transactions, to a suggestion that the taxpayer may not have known about the correct reporting requirements.

If you receive such a letter from the IRS or indeed undertook transactions in virtual currencies which you have not reported to the IRS, please contact our US/UK tax team.

For more information, please contact John Bull.