IRS Refunds Tax-Paying Crypto Users
The Internal Revenue Service (IRS) has sent refunds to crypto users who had correctly reported their taxes with proof of trades and transactions.
The matter of cryptocurrency-related taxes has been a major question within the US for a few years now. While the country continues to operate without any crypto regulations — or a hint that such regulations would arrive shortly — those willing to cooperate with the IRS might see some considerable benefits in the form of tax reductions, or even refunds.
Rewarding those willing to cooperate
This has already happened as the Internal Revenue Service provided tax refunds to some of the crypto users who complied with letters sent by the IRS. The letters requested proof of trades and transactions that would support the users’ tax reports, and those who had submitted them received refunds from the Service.
According to Chandan Lodha, the co-founder of CoinTracker, this serves as proof that the IRS does not aim to be punitive. The agency even notified one investor that he owed $3.900 in taxes, and after he had provided payment, the agency rewarded him with a full refund.
Lodha’s CoinTracker has already collaborated with hundreds of crypto owners in order to help them respond to the letters from the IRS. However, Lodha did not share how many refunds the agency had sent. What is known is that the IRS sent around 10,000 letters, requesting that crypto users fulfill their crypto-related tax obligations.
IRS knows when users make a transaction
The letters come as a result of a crackdown on reporting requirements and increased crypto transactions. Basically, the agency’s plan was to use the letters to help crypto users understand any errors they have made while reporting taxes. The letters also informed crypto users that the IRS had information about their additional crypto accounts, that the user may not have taken into account while reporting their trades and transactions.
Of course, the IRS does not always have accurate information regarding users’ transactions. Even if the user simply exchanges one cryptocurrency for another, and makes no profit during the process, the agency may only have information about the transaction, with no knowledge of what actually happened. But, those who complied with its requests to clarify the situation received a reward in the form of refunds, in cases where the agency made a mistake.
What do you think about the IRS’s willingness to work with crypto users? Let us know in the comments below.
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