IRS takes aggressive stance on cryptocurrency reporting

Cryptocurrency, or digital currency, is a fairly new way to conduct financial transactions. Although relatively novel, taxpayers have used digital currency like Bitcoins to purchase real estate and other tangible items, and the Internal Revenue Service (IRS) has taken notice.

In response to the growing rate of these transactions, the IRS recently announced it is sending out letters to those who hold digital currency with reporting information.

What type of reporting rules apply?

Within the publication, the agency stated it expects taxpayers to report digital assets that are “convertible into cash.” This means capital gains rules would likely apply.

What happens if taxpayers do not report?

They could face criminal charges. Depending on the extent of the charges, the IRS could push for steep penalties and even potential imprisonment.

Will the agency offer an amnesty program?

Taxpayers may remember the IRS and Treasury Department allowed taxpayers who failed to report foreign assets to self-report and partake in an amnesty program. Taxpayers who chose to come forward and report the presence of these accounts and paid applicable taxes and fees were generally free from the threat of imprisonment.

At this time, the agency has stated it will not offer a similar program for those who fail to report cryptocurrency.

How will taxpayers know if they are required to report?

The agency is sending out thousands of letters. These letters come in one of three forms, with each providing information on potential issues and instructions to come into compliance.

Taxpayers who receive a letter from the IRS are wise to take the matter seriously. A failure to act can result in an increase in financial penalties and additional charges.

No Comments

Leave a comment
Comment Information
Email Our Team

Contact Us to Get Started Today

Located in the Washington, D.C area, we serve clients in the District of Columbia, Maryland and Northern Virginia, as well as across the country and overseas. For a free initial consultation, call 202-381-1261 or complete our brief online form.

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Six Convenient Office Locations in and around the DC Metropolitan Area

Washington, D.C.
1050 Connecticut Ave NW #500
Washington, D.C. 20036

Phone: 202-618-1873
Fax: 888-235-8405
Washington Law Office Map

Columbia Office
10440 Little Patuxent Parkway, Suite 300
Columbia, MD 21044

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Columbia Law Office Map

Annapolis Office
839 Bestgate Road
Suite 400
Annapolis, MD 21401

Phone: 202-618-1873
Phone: 410-497-5947
Fax: 888-235-8405
Annapolis Law Office Map

Fairfax Office
8280 Willow Oaks Corporate Drive
Suite 600
Fairfax, VA 22031

Phone: 202-618-1873
Phone: 703-988-4817
Fax: 888-235-8405
Fairfax Law Office Map

Rockville Office
199 E. Montgomery Avenue
Suite 100
Rockville, MD 20850

Phone: 202-618-1873
Phone: 240-599-5009
Fax: 888-235-8405
Rockville Law Office Map

Baltimore Office
400 East Pratt Street
8th Floor
Baltimore, MD 21202

Phone: 202-618-1873
Phone: 443-743-3381
Fax: 888-235-8405
Baltimore Law Office Map