IRVINE, Calif., Nov. 11, 2020 /PRNewswire/ -- Unfortunately, many people who hold cryptocurrency still do not realize, or simply ignore, their tax and reporting requirements and can end up facing serious civil and criminal trouble down the line. Recently, our dual licensed Tax Lawyers & CPAs have been following increased IRS enforcement activity involving the virtual currency exchange site Coinbase and those who hold cryptocurrency on this brokerage without properly reporting it for tax purposes.
In October 2020, Coinbase released its first-ever transparency report, and some of the information contained in this report should serve as a major wake-up call to taxpayers who have failed to report virtual currency held in this or another exchange in years past. The data shows that the IRS, and its Criminal Investigation Unit, has been one of the top receivers of information from Coinbase, alongside the FBI and CIA. This data makes it clear that the IRS is requesting information from Coinbase for the express purpose of checking it against its own taxpayer data and looking for discrepancies where holdings on Coinbase have not been reported on taxpayers' returns.
If you have failed to report holding Bitcoin or other virtual currencies on your past returns or filed an incomplete or misleading picture of your cryptocurrency holdings, the time to act to correct this is now. Once an audit or criminal tax investigation has begun, it will be too late to amend your returns or take advantage of a voluntary disclosure program. Returns can be safely amended only where small amounts of tax went unreported.
By reaching out to one of our skilled tax attorneys and CPAs at the Tax Law Offices of David W. Klasing, you can rest assured you will receive the best possible advice about how to correct past errors, mitigate any damage that has already occurred, and prevent future mistakes from occurring by adopting a system of best practices for keeping track of the numbers that must be reported on future returns involving cryptocurrency.