Will IRS Tax Audits Increase Because People Reported Bitcoin & Crypto Gains?

[GlobalProtection]

Dear Global Protection:

You are Australian, right? If so, please post this using your bitcoin talk username.

I am from the U.S. so I want you to post this because you are Australian and will not get into trouble with I.R.S.

Sincerely,   David

P.S. Anyone who reads this message below, I ask you to take this message below to other forums and blogs so it gets posted there also. Thank you.



So here is what David wants me to post here on bitcointalk.org forum:



(David's message quote) "WILL U.S. IRS TAX AUDIT POTENTIAL INCREASE BECAUSE YOU REPORTED BITCOIN AND CRYPTOCURRENICES ON YOUR 1040 TAX FORMS?


If you reported your cryptocurrency and bitcoin gains to the I.R.S. and you got audited, please let others hear about it on bitcointalk.org.


Those who report their bitcoin or crypto currency gains or losses on their tax forms, should be rewarded for doing so and not penalized with an additional tax audit.

Because some think an audit risk will increase if a person reports their bitcoin or crypto gains or losses on their tax returns, a thread should be created on bitcointalk.org forum to let everyone know.

Those who report should not be penalized with an audit. The I.R.S. should spend their time looking for those who do not report instead of examining those who do report their gains to the tax authorities.

I am asking people to report on the thread you create, about if they got audited from the Internal Revenue Service or not after they reported their bitcoin or cryptocurrency income or gains on their 1040 and schedules or forms.

The I.R.S. will be less likely to go after those people who report their bitcoin and crypto currency earnings or gains if they know that people who are being audited by the I.R.S. are announcing that fact to other U.S. citizens who are trying to decide whether to report to the I.R.S. or not.

If we hear that quite a few people who reported their crypto gains or bitcoin gains on their 1040 tax forms and schedules, got audited, then maybe the I.R.S. will see that and stop auditing those who report and pay their bitcoin and cryptocurrency taxes to the United States Treasury.

The I.R.S. needs to find and go after those who do not report and do not pay, instead of auditing the good people who are compliant.

If you reported and did not get audited by the IRS please tell us also." (unquote of David's message)

[acarli]

Here is an article on CNBC on how to minimize your chance of getting audited here in the US.
https://www.cnbc.com/2018/04/02/got-crypto-heres-how-to-avoid-an-audit-from-the-irs.html

Also, here's a notice from the IRS warnign filers to claim crypto currencies on 2017 tax year. I don't know if letters when out to tax payers. The CNC report said they did send letters. My question is how did they get the list? From the John Doe vs. US (Coinbase?) If I got a letter I would most certainly declare everything knowing that my name was on their list. Here's the notice:
https://www.irs.gov/newsroom/irs-reminds-taxpayers-to-report-virtual-currency-transactions

Also, this is scary. By not claiming up to 250k could result in jail time. With the value of BTC it's easy to imagine a lot of bitcointalk.org members could be in that category.

Here's another website that's a blog for bitcoin and tax issues: https://bitcoin.tax/

....Because some think an audit risk will increase if a person reports their bitcoin or crypto gains or losses on their tax returns....

I don't know. I think the IRS will first take the low hanging fruit. They want the biggest fish first. They will most likely get a list of all account holders at the major US exchanges (fiat to crypto) and then get a list of the transactions above a certain threshold. Then confirm the tax filings.

The I.R.S. needs to find and go after those who do not report and do not pay, instead of auditing the good people who are compliant.

yes, I agree with you there. I would like BTC to be tax free, but such are the laws.

[vapourminer]

i think those that did not report crypto gains will be definitely audited at some point. even exchanges that did not initially require kyc at the beginning and then do so at some point will now have your history just waiting for the irs (or whatever form it exists where you reside) to request it.

i have reported my crypto to the irs for 4 years. 1st couple years were "best faith effort" as i had no real records for exchanges that went down. last couple years i kept better records and used bitcoin.tax to get a more accurate report. then i hand it to my cpa and let him sort it out.

i have not been audited but then again im small time.

i think their 1st priority is those they find reported nothing and suddenly kyc comes along at some point and bites them in the ass.

while i dislike tax laws on crypto, its better to be a good boy to the irs. they have absolute power to ruin your life. i have no desire to mess with them as its better to be a sheeple in some situations as opposed to trying to save a few bucks and ruin my wife and my future.

after all what good is crypto gains when the irs can confiscate everything you own, and do so without due process of law. you dont stand a chance once the irs starts gunning for you.

[OgNasty]

I’ve reported Bitcoin gains and not been audited. You’d think they would start with auditing the people who don’t report, but I’ll admit the thought of being audited as a result of mentioning Bitcoin crossed my mind.