- On 26th June 2019, the IRS took a heavy step in the cryptocurrency industry.
- The International Service Revenue had asked virtual currency taxpayers to provide legit evidence to their unreported gains.
- The IRS further warned the crypto holding taxpayers they have information related to their cryptocurrency account.
The Internal Revenue Service is the governing body of the United States that looks over the revenue services of the country and is the bureau of the Department of the Treasury. The IRS is in charge of collecting taxes and supervises the Internal Code Revenue which is apparently the main body of the federal statutory tax law of the United States of America. On 26th June 2019, the IRS took a heavy step in the cryptocurrency industry. For the very first time, the International Service Revenue had asked thousands of virtual currency taxpayers to provide legit evidence to cover up the gains that they have received and were unreported to the agency.
IRS Issued A Warning In the Soft Letter That They Have Information
Consequently, the IRS further warned the crypto holding taxpayers they have information related to their cryptocurrency account. In the soft letter (letter 6173) issued by IRS reads the accused taxpayers may not have met the US Tax filing and reporting requirements for the transactions involving cryptocurrency. However, the nature and description of the so-called information were not included in the soft letter.
National Taxpayer Advocate Says That Letter 6173 Has Breached Rights Of The Taxpayer
The letter 6173 demanded the concerned taxpayers submit their virtual asset transaction history and tax documents copies of the past 5 years. Further, it crossed the limits when it asked them to also provide them with a sworn explanation of their violation of reports.
The National Taxpayer Advocate, Erin M. Collins has said that the letter 6173 diminished the IRS’s duty of being an Ombudsman and a public defender. In her ‘2021 objective reports to Congress’ which was recently released on June 29, she wrote that the IRS, Congress and the Code have continuously evoked the taxpayer’s rights and protection. However, the letter clearly undermines their rights and protections when it should be doing the opposite. The letter 6173 has clearly violated two doctrines of the Taxpayer Bill of Rights. Firstly, it has breached the right of privacy and secondly, it has breached the right to be informed according to Collins.
Furthermore, Collins has assured that the Taxpayer Advocate Service will work together with the IRS in order to eradicate any such demands that would breach the taxpayer’s right of privacy and right to be informed. However, on the contrary, the agency has not yet confirmed any such appeals.