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Crypto Users Receive Next Wave of IRS Tax Warning Letters

Crypto Users Receive Next Wave of IRS Tax Warning Letters

The Internal Revenue Service (IRS) sent out the next round of tax warning letters to American taxpayers involved in cryptocurrency transactions. Dated August 14, the letters are now received by Bitcoin and other crypto holders.

IRS Letter 6174-A (source: cointracker.io)
IRS Letter 6174-A (Source: CoinTracker.io)

The IRS has continuously made efforts to regulate the crypto tax space by sending out again tax warning letters to concerned US residents. Initially, these letters were circulated to 10,000 US crypto users in July 2019.

These letters came out in 3 variations: IRS Letter 6173, IRS Letter 6174, IRS Letter 6174-A. Letters 6174 and 6174-A are no-action letters, intended to educate the users about crypto tax filing obligations, schedules, and additional IRS resources.

On the other hand, receiving a Letter 6173 must be taken seriously as it requires a response from the recipient within the date mentioned in the letter. Failure to respond would be subject to inevitable repercussions such as tax examination.

People who have received these outdated letters have expressed their confused sentiments across social networks. Among them is the award-winning WBEZ investigative journalist Maria Inez Samudio. She claimed to have paid her taxes but was still charged with penalties.

As per the agency, many of the notices were mailed past the due payment or response dates as a result of the COVID-19 pandemic. Yet this action has been deemed unacceptable and recently addressed by the House Ways and Means Committee Chairman Richard Neal, requesting the IRS to pause sending notices to taxpayers temporarily.

Through a formal letter sent to IRS Commissioner Charles Rettig, Neal mentioned that “many Americans are grappling with the worst public health and economic crisis of their lifetime, and it is irresponsible of the IRS to impose additional, unnecessary burdens on these struggling taxpayers.”

According to the Taxpayer Advocate, the IRS has already generated more than 20 million notices that might be carried out in the next month or two.

As of the time of writing, the IRS still has no response in line with the Committee’s request.

An aspiring journalist who spills her ideas in cryptocurrency and blockchain-related matters. With her background in Communication and Journalism, she is more inclined to write about reality than fiction.