IRS Sending Warning Letters to More Than 10,000 Cryptocurrency Holders



hey what's happening guys what's going on YouTube you guys have tuned in to rules for rebels and we're talking crypto today it's been a while since we've kind of touched on cryptocurrency and kind of what got my attention there's been some some stuff circling on social media and reddit about people getting warning letters from the IRS talking about back taxes now initially you know I never really believed things from like coin Telegraph or CCN and a lot of these kind of crypto publications a lot of them are just you know they're they can't can be good news sources but like so much of the stuff they put out it's just like nonsense and clickbait and all these articles about you know Wall Street investor says bitcoins gonna be worth a hundred million dollars by 2022 you know it's just like a lot of stupid stuff so I don't put too much dhaka knows however I did see an article on CNN business as well as The Wall Street Journal unfortunately The Wall Street Journal is always pay gated you got to pay for a subscription err so we're gonna go with the CNN business article and we're also gonna take a look at the reddit reddit forum about this I haven't really scrolled through here yet but we'll take a look and see anybody who you know reportedly got these letters now here's what's kind of crazy about this so I honestly I haven't read the article yet I figured I kind of read it along with you guys but I think it's you know for the IRS to be going after crypto users when they themselves have not even done an adequate job of providing clarification on kind of crypto tax policy I think like one area that I think still hasn't been resolved is in the case of either like ear drops or Forks I don't think the IRS has officially issued a directive on like how investors should treat those is it long-term capital gains is it short-term capital gains is it you know ordinary income is it free money like you know nothing's really been stated you know a couple years back was it 2015 and I'm goofing up my years here maybe somebody can correct me in the comments but remember a couple years ago the IRS issued some statement that like out of however many millions of cryptocurrency investors like 44 people filed taxes or something like that like some ridiculous number and I think in you know as crypto became more of a serious asset and not like you know fake like online Zelda money or something like that like people started taking cryptocurrency more serious and and we started having resources like Bitcoin tax and others pop up that would actually help you have any chance whatsoever of figuring out what your tax burden is like prior to that like coin based bit wrecks you know none of the sites really issued reports for you it's really difficult to determine what you owed you know there wasn't a lot of clarification on whether trading to altcoins was a like-kind exchange or not like the whole thing is just kind of a show so with the IRS still not having really issued good clarification on any of this stuff it's kind of silly to me to be going after people but let's take a read and kind of see what they're saying here so I guess three different types of letters have been issued one is like hey you may want to look into whether you properly paid your taxes and the next one is like hey we think you probably didn't properly pay your taxes and then the last one is like we require responses you're gonna be audited so this comes out of Washington CNN business the IRS has begun sending thousands of letters to us cryptocurrency holders warning them that they may have incorrectly reported the taxes they owe on their transactions involving digital money uh and what another the interesting thing here and maybe we'll get into this in the article but one thing I wonder about it sound like at least the way this is this opening sorry about that guys my my Thai food just just arrived so who off to kind of plow through this article I got some what did I get I got spicy basil leaf hot basil fried rice and some crab rangoon so anxious to dive into this but the the way this article opens up it sounds like they're going after people who have at the very least reported some cryptocurrency gains just by the fact that they say may have in incorrectly reported the taxes they owe so it leads me to believe they're going after people who at least attempted to file their taxes but maybe did so incorrectly or calculated their gains incorrectly as opposed to people who still haven't even filed any taxes whatsoever they're cryptocurrency trading as many as ten thousand taxpayers will have received the letters by the end of August the IRS said on Friday regulators identified sorry guys I'm getting goofed up here too excited about my Thai food a regulars regulators identified the taxpayers through what the agency described as ongoing I RS compliance efforts so yeah there are some you know there are some companies and some technologies out there that allow them to track the blockchain but I think more than likely it's just like coinbase and other companies turning over records the IRS is sending out three types of letters the tax payers known as letter sixty one seventy three letter sixty one seventy four and letter sixty one seventy four a depending on the severity of the issue on social media some people who claim to have received the letters say one version simply asked tax payers to review their returns and file an amendment if necessary another is a more serious warning of possible non-compliance with US tax law and potential IRS enforcement and a third requires a response or the respondent will be audited on Thursday night Nicole green a tax preparation professional and certified Bitcoin professional with the ngg Tax Group received an urgent email from a client about possible unreported cryptocurrency transactions no one is talking taxes 10 p.m. at night in the middle of July Green told CNN business but this letter got their attention and they were freaked out ah that it seems is just the kind of attention the Internal Revenue Service is aiming to get tax payers should take these letters very seriously by reviewing their tax filings and when appropriate amend past returns and pay back taxes interest and penalties IRS commissioner chunk Chuck Rettig said the IRS is expanding our efforts involving virtual currency including increased use of data analytics we are focused on enforcing the law and helping taxpayers fully understand and meet their obligations now that seems kind of disingenuous since I think they've done a pretty piss-poor job of doing so but the obligations have not been abundantly clear so that's kind of what I was just saying because there wasn't a lot of guidance from the IRS except for one publication many people were like I'll get around to it said green now the IRS is knocking on their doors the existing guidance IRS noticed 2014 – 21 said that for the purpose of federal taxation virtual currency is property when a user purchases cryptocurrency at a given price and then later trades it away whether by buying coffee or selling it on an exchange the sale is subject to capital gains because it is considered property now a couple years ago something was going around called the cryptocurrency Fairness Act and with the cryptocurrency Fairness Act aim to do was the cryptocurrency Fairness Act basically said something along the lines and so and somebody correct me if I'm a little bit off and I said ona of the article in front of me but essentially purchases up to I believe it was $600 were immune from from capital gains so you know if you bought Bitcoin at $1,000 and it goes up to $1,500 and you buy a cup of coffee technically you're supposed to figure out on that $2 and 33 cup cent cup of coffee what percentage of that was gained so you know I'm that thousand dollar Bitcoin going up to 1500 you know maybe thirty cents of your cup of coffee was capital gains and you're having to track this along with if you're somebody who spends cryptocurrency on a regular basis every transaction that you do in antalya all that up and keep records of it all it's just not very reasonable so I either Congress or the Senate had proposed something called the cryptocurrency Fairness Act which I thought it was pretty generous giving up to $600 at $600 you could essentially live off of your cryptocurrency and never pay any capital gains taxes because like you know sure big purchase if I buy a car if I buy something huge I'm going to incur capital gains I don't have to report on that but you know I can buy my groceries every week and not pay any capital gains if I'm having a contract or come over to my house and install a new garage door opener for 300 bucks I could pay him so you could pretty much live off your crypto and you know kind of not be subject to capital gains taxes so that would be pretty sweet but nothing ever really came of that let's see so the article goes on to say failing to report the transactions at the IRS could expose a user to criminal and financial penalties for those who have received the notices Green said the it's best step is to request your wage and income transcript which shows all the data the IRS received over the past two years you may owe taxes on the full amount but you may not do not freak out she said but if you do need to take action get a copy of your transcript call a tax professional and amend your return if needed so there's a couple more articles about this I think the IRS reminds 10,000 taxpayers that they could be subject to cryptocurrency taxes I'll link to these articles for you guys as well I'm just kind of scanning this it's a really short article I just kind of wanted to scan a couple articles in see if there was anything else that wasn't mentioned let's take a look at reddit what do people have to say meanwhile Apple is keeping over 200 billion offshore to avoid taxes the joke is on the IRS most of us are like 80% down on our principle about investments somebody and keep in mind you know people on reddit are talking out their ass people talk like they know what they're talking about most people don't so don't take anything that you hear when I read some of these comments you know take everything with a grain of salt let's see somebody says Captain Cook says like-kind exchange treatment still applies to 2017 transactions and I believe this is incorrect well go ahead and read this guys come in anyway as long as those people didn't convert to Fiat ie once they converted to Fiat Fiat to crypto didn't converting back to Fiat in 2017 so they wouldn't have any gain recognized in 2017 and would just end up reporting their net gain loss in 2018 when they sold or transferred from crypto to crypto because like kind of exchanges don't work okay so he's saying they don't work I'm a CPA who is almost done building a crypto tax app so I'm trying to help people become aware of the like kind exchange advantage for 2017 but also it not being available after that so maybe there's some truth to that I don't know you can still amend your returns as well as take advantage of this if you don't get screwed if you are in a situation you described let's see the IR oh then somebody else says the IRS never confirmed that crypto – crypto trades are like kind I would be very worried if my CPA assured me otherwise and that's actually what I what I heard I always heard that the IRS does not does not consider crypto decrypt Oh exchanges like like-kind exchanges and I was under the impression all crypto trades you know Bitcoin to altcoins altcoins back to bitcoins everything was taxable let's see Canada has carry back allowances on capital losses for up to three years is the tax rate on capital gains a flat value in this states I couldn't imagine realizing gains in the first month of a FY and having to predict my marginal marginal tax rate for eleven months or so so I can earmark enough Fiat to cover the taxes let's see again nobody reads the article it states the letters were sent to anybody who bought traded or sold over twenty thousand dollars worth of crypto between 2013 and 2015 they are going after they are going after the winners of the 2013 bull run not the 2017 one as of yet so here's what's kind of interesting about that right it's like you know a lot of people who yeah okay here's what I was gonna say so you really didn't have to make money to trade over twenty thousand dollars in currency a lot of people um you know if you had a Bitcoin at a thousand dollars and you were like swing trading trying to make 50 bucks here and there I you know you buy Bitcoin at a thousand you sell it at a thousand 50 you make 50 bucks that's $2,000 that's over two thousand dollars in trades right there right you bought a

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