Pretty expected. The more mainstream Bitcoin becomes, the more regulations the government will oppose on us. Back a year or 2 ago, you would never guess that these sort of things would happen, and a lot of people were able to easily avoid tax via crypto and a lot of OTC trades. I believe the IRS has been slowly growing their operations related to virtual currencies for 2 years now, and is not that much of a development, more of an omen for the things to come in following years.
what i want to know is, where is their data coming from? is it all from the coinbase summons 2 years ago? are there exchanges that actually send 1099 forms to the IRS? is there blockchain analysis involved---does it go beyond those services where we've done KYC?
i remember there was a big scandal when these warning letters and audits starting hitting ebay sellers. people say paypal was sending 1099s to the IRS and not sending them to sellers. i think a lot of people got screwed over that way. in this case, i don't think there are any 1099s involved, so i'm wondering how (besides the coinbase summons) they targeted this group of taxpayers.