New IRS Notice Brings Worry to US Bitcoin Traders

The Internal Revenue Service (IRS), the United States (US) authority accountable for collecting taxes and overseeing the Internal Revenue Code, posted a sweet video on its official social media platforms about the recently issued CP2000 notices which are of interest to many blockchain users and Bitcoin traders. This is not an audit though it works the same, however, it looks like the IRS notice could cause worry for BTC and digital asset traders.

A CP2000 notice doesn’t mean you’re being audited, but there’s a discrepancy with your tax return that needs to be resolved. Watch this #IRS video to learn more: https://t.co/4xWNRLIndJ.
— IRS (@IRSnews) August 26, 2019

The letter that aims at remedying divergences made by beneficiaries in tax reporting, is one of the letters related to cryptocurrencies that were lately directed and sent by the IRS. Although the long anticipated guidelines for reporting are not yet provided, cryptocurrency owners are on the other hand expected to discern, know or learn how to file. A wide number of cryptocurrency holders will be shocked to discover that the virtual currency exchanges share their financial data with the revenue service of the USA.

Threat to Cryptoasset Traders

Generally, it is true that the CP2000 notice isn’t strictly a cryptocurrency-connected communication such as notifications 6173, 6174 or 6174-A.However, due to the big part these cryptoasset exchanges now participate in Bitcoin trading, whereby they have to release financial info of their customers to the agency, a good number of taxpayers tend to declare manipulated earnings which don’t correspond with the records stored by their respective exchanges they use. Exchange users have to know that the US law requires all the brokers and barter exchange services to account and report independently through a 1099-B.

Since the beforehand pledged guidelines are not yet provided to the public, the possibility of divergence is doubtfully hefty. From the report by hrblock.com, all these notices are not friendly cues as we may expect, they tend to come with various actual threats that can cause serious penal action.

Through its spokesperson, the IRS assured people that the notices are not audits at all, and further told them that: the have got only one month to respond; they can challenge the proposed change, but must answer back either way; and if no answer can be acceded to, the disagreement can be opposed in courts of law such as the US Tax Court.