- The IRS intends to use the letters to curb tax evasion among crypto investors.
- Investors risk being slapped with tax evasion charges if the IRS carries out an audit.
The cryptocurrency investors in the United States are currently receiving letters from the Internal Revenue Service (IRS). The letters serve to inform more than 10,000 investors that they owe the taxman taxes levied on the digital assets they hold.
Various investors are in a dilemma, some thinking if they should immediately file for an amendment of tax returns which will seek to correct the mistakes and omissions. However, this method can only work if the IRS chooses not to carry out an audit.
Moreover, the investors who have been hiding from the taxman are asking themselves if it’s wide to come clean on their actions. However, there is a catch, because if the IRS decides to audit individuals, they could be charged with criminal tax evasion.
On the other hand, there are investors who are yet to receive a letter but think they did not report their crypto holdings. The big question is, should they send in an amendment secretly or make a delinquent return?
According to a tax lawyer based in San Francisco, James Creech:
“For 90% of people it’s not worth the time or the effort to fight or hide from the IRS,” he adds “Amend the returns, take the lumps, pay the tax and penalties and consider yourself lucky to have crypto gains instead of crypto losses.”
The IRS started sending out the letter in late July. The letters are meant to help reduce tax evasion actions among cryptocurrency investors. The taxman is sort of playing catch up for an industry that has ballooned in a very short time.
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