The US Internal Revenue Service (IRS) recently sent out more than 10,000 letters to taxpayers, as it expands its efforts to resolve unreported or misreported virtual currency transactions. This further action is consistent with an expanded focus on tax enforcement internationally, with the Australian Tax Office recently confirming that it is collecting bulk records from Australian cryptocurrency exchanges as part of a data matching program to ensure people trading in cryptocurrency are paying the right amount of tax.
In response to the increased scrutiny from the IRS, United States-based accounting firm H&R Block (NYSE: HRB) is capitalising on the opportunity to offer an expanded consulting service guiding taxpayers on how to accurately file cryptocurrency gains and losses. Responding to the increased volume of IRS letters and notices, H&R Block have emphasised that this increased regulatory attention should remind taxpayers that the possibility of needing to interact with tax collectors is much more common than many realise.
“Some of these notices are really just a courtesy, meant to help taxpayers understand their obligations and stay ahead of the curve. But that doesn’t relieve the taxpayer of the stress and anxiety that receiving an IRS letter can cause. It’s nerve-racking. Plus, some letters do require a response or some action from the taxpayer.” - Andy Phillips, director at The Tax Institute at H&R Block.
Generally, this ought to be a timely reminder that ignorance of tax obligations is no longer an excuse for non-compliance. Particularly as the number of services offering tailored crypto-tax advice has expanded significantly. Notably, in Australia, Independent Reserve and KPMG have co-developed a Tax Estimator tool built into the exchange that makes it easy for users to stay compliant with their tax obligations.
Crypto Tax Australia also offers a specialised tax planning, structuring and advisory service in this space.
The tax team at Piper Alderman is well-versed in dealing with the ATO in relation to cryptocurrency matters, including controversies.