News

Virtual currencies have been growing rapidly in terms of type and frequency of use. They are increasingly becoming an accepted form of payment even by major established companies and financial institutions. Not all taxpayers, however, appear to be familiar with or complying with their tax reporting obligations involving virtual currencies.

The Internal Revenue Service estimates that only a few hundred taxpayers have reported virtual currency transactions, while the agency has collected information on and started sending out letters to around 10,000 taxpayers that it believes have engaged in virtual currency transactions.

Addressing this area of noncompliance is becoming an IRS area of focus, and taxpayers and their tax advisors would be well-advised to review their virtual currency tax requirements before IRS enforcement action heats up further.