If you engage in virtual currency transactions, be sure that you have reported them! Many people are not aware that any U.S. taxpayer who has engaged in transactions involving digital currency must report any income received from such sources.
The window to voluntarily report the transactions, prior to the IRS possibly contacting a taxpayer, is closing: On November 30, 2016, a federal court in San Francisco authorized the Internal Revenue Service (IRS) to issue a John Doe summons to Coinbase Inc, which operates the largest U.S. web-based global convertible digital currency wallet and platform for the conversion of bitcoins to dollars. The summons is broad and seeks records from 2013 to 2015 for any Coinbase, Inc. user with a U.S. address, telephone number, email domain, or bank account. The IRS is demanding that Coinbase, Inc. produce records that include account profiles, transaction logs, payment processing data, customer correspondence or emails, statements of account and all records reflecting or relating to the disbursement of funds to any user.
To read more about the court action, click here.
Tax return filing requirements can be complex, and the consequences of failing to accurately report accounts and transactions can be harsh and possibly result in severe penalties and/or criminal charges. If you may have unreported income, such as digital currency transactions, or need to make a voluntary disclosure, contact us today to determine the best course of action for you.