The IRS issued a Statement of Work this week regarding a pilot program to have outside auditors review certain virtual currency tax returns. This program is the latest effort by the IRS to more closely oversee cryptocurrency transactions. In 2019, the IRS sent out warning letters to traders thought to have misreported their tax liabilities related to their crypto exchanges. Then in October 2019, the IRS updated its tax guidance regarding reporting cryptocurrency transactions.
The most recent tax guidance issued by the IRS may be found here: https://www.irs.gov/newsroom/virtual-currency-irs-issues-additional-guidance-on-tax-treatment-and-reminds-taxpayers-of-reporting-obligations
If you are audited for transactions related to cryptocurrency, please contact our office.