It is no secret that cryptocurrency holders are facing increased scrutiny by the IRS. In 2018, the agency announced a virtual currency compliance campaign that included outreach and examinations. As part of its latest sequence this summer, the IRS recently publicized that it has begun sending letters to cryptocurrency holders advising them of their reporting and payment obligations and warning that failure to properly report transactions or pay taxes owed might result in penalties or criminal enforcement. Following on the heels of this announcement, the IRS also began sending notices to taxpayers that claim a discrepancy in the income reported on tax returns. The IRS expects to send up to 10,000 letters to cryptocurrency holders by the end of August 2019, but there is no information on the number of notices that will be issued.

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