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The Internal Revenue Service is warning taxpayers with cryptocurrency holdings to report income and pay taxes on transactions. The IRS said by the end of August more than 10,000 taxpayers will receive letters warning them to take action if they have previously failed to report income from such transactions.

Cryptocurrency is considered property for federal tax purposes as reported in IRS Notice 2014-21 (PDF) . The agency said virtual currency is an ongoing focus area for IRS Criminal Investigation.

IRS Commissioner Chuck Retting warned in a prepared statement “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."

The IRS started sending the educational letters to taxpayers in mid-July. There are three variations— Letter 6173, Letter 6174 or Letter 6174-A—each strives to help taxpayers understand their tax and filing obligations and correct past errors.

Last modified on Monday, 29 July 2019
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