Cryptocurrency users have reported receiving tax refunds from the United States Internal Revenue Service (IRS) after properly declaring their holdings.
A new report by Law360 shares the experience of multiple crypto investors who received tax refunds from the IRS after accurately reporting their investments. The reports comes at a time when crypto reporting on taxes are still low, with many members in the community frustrated by the lack of cooperation with the IRS.
Chandan Lodha, the co-founder of crypto tax firm CoinTracker, said the IRS is using refunds to show crypto investors that they want to encourage users who properly report their trading as opposed to issuing a punishment. One crypto investor was informed that he owed $3,900 in taxes, and was issued a full refund upon paying the amount due.
According to the report, more than 10,000 individuals received letters from the IRS earlier in the year ordering them to pay taxes owed on cryptoassets and trading. Many of the individuals targeted by the IRS stem from the 2017 Coinbase lawsuit, when the exchange was required to hand over account information on roughly 13,000 customers.
Laura Walter, a CPA who goes by the popular Twitter handle Crypto Tax Girl, told users this was an indication to get “compliant as quick as you can.”
Most of my clients who received these were early Coinbase users. They've gone out to some big fish, but also to some smaller holders too.— Crypto Tax Girl (@CryptoTaxGirl) July 26, 2019
It seems as if this is a warning to everyone to get compliant as quick as you can while the IRS is still feeling somewhat forgiving :)
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