Cryptocurrency investors start receiving letters from the IRS

Regulation • July 28, 2019, 4:12AM EDT

UPDATED: July 28, 2019, 4:22AM EDT

The Internal Revenue Service (IRS) has begun sending letters to over 10,000 U.S. cryptocurrency investors last week, asking them to report their crypto holdings and pay taxes properly. The IRS said that the names of these taxpayers "were obtained through various ongoing IRS compliance efforts."

There are three variations of the educational letter (6173, 6174 and 6174-A), all of which are supposed to help taxpayers understand their tax and filing obligations and how to correct past errors.

Letter 6174 and 6174-A are no-action letters, which means that if all the obligations have been met, there is no need to respond. The taxpayers could receive these letters despite being fully compliant. Letter 6173, on the other hand, alleges noncompliance and requires action. If there is none, the tax account will be examined by the IRS. The Block has obtained Letter 6173, which can be seen below.

The full 'Letter 6173' can be viewed and downloaded here.

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Larry joined crypto research full time in early 2017 and has expertise in capital markets, market structure and early stage DeFi companies/protocols and token economics. He has a background in economics and finance.