IRS Virtual Currency Letters to be Mailed to 10,000 Taxpayers

NSTPDigital Currency, Internal Revenue Service (IRS)

IRS Mailing Virtual Currency Letters to 10,000 Taxpayers
IRS Virtual Currency Letters to be Mailed to 10,000 Taxpayers

Starting at the end of July and through the month of August, the Internal Revenue Service will be sending Virtual Currency soft letters to over 10,000 taxpayers. There are three different letters, intended to be educational to those receiving the information.

What does the virtual currency letter mean and need I do anything if I receive one?

The action required of the taxpayer depends on the letter you receive.

Letter 6174 is called a soft letter and intended to educate taxpayers. It will include information about:

The taxability of virtual currency transactions

  • The forms likely required to report the virtual currency transactions
  • The resources available on the topic
  • It doesn’t require a response
  • Indicates amended returns would be required if the taxpayer determines virtual currency transactions have not been reported properly

Letter 6174A is also a soft letter intended to educate the taxpayer and will include information about:

  • The taxability of virtual currency transactions
  • The forms likely required to report the virtual currency transactions
  • Instructions about how to report the transactions
  • There is likely to be enforcement in the future
  • The resources available on the topic
  • It doesn’t require a response There is an opportunity to amended returns before enforcement action

Letter 6173 is another soft letter intended to educate the taxpayer. It will include information about:

  • IRS knowing the taxpayer has 1 or more virtual currency accounts
  • The virtual currency transactions have not been reported or no return was filed
  • Taxpayer must file an original or amended return to report the transactions or send a letter explaining how and where the virtual currency transactions have been properly reported
  • Letter requires action by the taxpayer
  • The dedicated telephone number for questions, the dedicated addresses for filing amended or original returns and for filing correspondence

IRS has obtained this information from compliance activity to determine who will receive the letters.