IRS renews focus on cryptocurrency-related offenses

The Internal Revenue Service (IRS) has signaled for years that it would eventually bring enforcement actions against individuals who failed to report cryptocurrency gains. It appears that “eventually” is over and that those actions are underway.

Late last month, news reports indicated that the IRS had begun sending letters to individuals who engaged in virtual currency transactions. In late July, the IRS issued a news release stating that, by the end of August, more than 10,000 taxpayers will receive one of three “educational letters” in order to “help taxpayers understand their tax and filing obligations and how to correct past errors.”  And, just last week, it was reported that the IRS was putting increased pressure on certain taxpayers by sending another round of letters (called CP2000 Notices) to individuals whose reported information did not match information provided by third-parties. 

What does all of this mean in terms of IRS enforcement? There are several key takeaways.

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