The U.S. Internal Revenue Service (IRS) is sending another round of warning letters to cryptocurrency users, this time to taxpayers it believes to have misreported income from exchange transactions.
In addition to the three letters sent last month to crypto traders advising them they may have incorrectly filed their taxes, the IRS is now also telling certain investors that they did, in fact, report the wrong amount of income from crypto transactions. And the agency is looking to collect.
According to one letter shared with CoinDesk, a taxpayer owed nearly $4,000 for the 2017 tax year. This taxpayer owed more than $3,600 in taxes alone, with another $200 or so in interest accrued.
The letter was dated July 29, 2019.
Chandan Lodha, co-founder of tax software provider CoinTracker, told CoinDesk that the IRS has been sending these so-called CP2000 notices to some customers, indicating they are potentially on the hook for revenue they did not report.
“The IRS is sending out these other notices and those are kind of like warning letters of varying degrees of how threatened they were,” Lodha said of the earlier three letters. But the “CP2000 is a slightly different letter.”
He went on:
“Basically what it says is ‘hey we have a report from one of the financial institutions you use and the amount they reported to us the IRS is different than the amount you, the taxpayer, reported and this is the amount you owe’ and it’s a 30-day letter meaning you have to respond in 30 days.”
The CP2000 letter has been used outside of the cryptocurrency space for other forms of unreported income,