IRS: Cage The Crypto Kraken

A Case for Cryptocurrency Tax Amnesty

Good war planning evolves in stages, from strategic to tactical to political. The IRS appears to be in its operational phase, building a cryptocurrency campaign. Several developments signal a strong shift in IRS enforcement. These developments dwarf some 10,000 IRS letters sent to crypto users in 2019 warning them of potential compliance deficiencies. These Letters were just the arrow across the bow, while the IRS is now wargaming. Crypto-diplomacy and amnesty appear to be lost.

IRS SB/SE ANNUAL REPORT

IRS promises in 2019 came true. In a 2019 Annual Report published by the Small Business/Self-Employed Tax (SB/SE) Division, the IRS declared cryptocurrency to be an important focal point for enforcement and compliance. The crypto discussion is wedged neatly near taxpayer fraud and highlights Bank Secrecy Act examinations. In tax circles, fraud and secrecy are not good bedfellows. The IRS cast a shadow on cryptocurrency and it was pitch black.

The Annual Report discusses the establishment of a virtual currency task force . It will assist in resolving crypto tax compliance and make audit recommendations. The increased training of cryptocurrency subject matter experts and technical personnel is also highlighted. The educational expectations do not stop there, however.

Now, the IRS expects everyday taxpayers to be crypto-conscious. In 2020, IRS Form 1040 boasts a new “virtual currency” disclosure question ahead of naming…