A user who received the letter suggesting a $127,000 correction said he should actually receive a refund, as he bitterly lost out during the year 2017.
For the second year in a row the U.S. Internal Revenue Service (IRS) sent letters to cryptomotic investors warning that they „declared less cryptomotic than they should. This is not just a problem for the obvious reason of trying to raise more taxes on digital assets, but because many of these letters are wrong and can be very hard work for taxpayers.
The problems related to the IRS are not exclusive to the USA, as here in Brazil studies have shown inconsistencies in how the reports on trading of Bitcoin Superstar and other crypts are conducted.
In a post on the official CryptoTrader.Tax blog it was shown that the IRS sent the letters once again, claiming that certain taxpayers did not declare their real earnings with cryptomorphs. Some of the required adjustments on the cards amount to $ 127,000, which is certainly scaring a lot of people in the US.
IRS letters that U.S. taxpayers, cryptomote investors, are receiving.
The letters refer to the 2017 fiscal period, with completion in 2018. With this in mind it is easy to understand how the „gains“ of the period can be misinterpreted by the revenue, since it was one of the most volatile periods in the cryptomoeda market.
A user who received the letter suggesting a $ 127,000 correction said that he should actually receive a refund, since he bitterly lost during the year 2017. With investments in cryptomorphs alone he lost $2,000 during the year.
Why are investors receiving letters from the IRS?
What happened to taxpayers in the U.S. was a result of how tax and tax information is checked. The IRS compares the information provided directly by taxpayers with the information that brokers send, so many believe that the confusion regarding the „undeclared amounts“ comes from the information provided by brokers.
According to CoinDesk, the problem is that brokers declare all transactions to the IRS using the 1099-K form. This form is used to declare all transactions that have generated profits, even if some have resulted in losses.
Thus, brokerage houses can end up reporting a dramatically inflated amount on a taxpayer’s profits.
Despite the scare (mainly because of the high value), the letter is only a recommendation for adjustment. Investors may „appeal“ and send a letter explaining their gains and losses with the cryptomoeda for revenue, but as you can imagine, it’s a headache and a very boring procedure (fine mesh).