Got Cryptocurrency? Get Ready For An IRS Audit

On May 12, the IRS issued a statement of work soliciting “consulting services to support a taxpayer examination involving virtual currency.” The SOW was sent to popular cryptocurrency tax software companies such as CyrptoTrader.Tax, among others, in an effort to provide the IRS with the industry expertise necessary to identify and pursue cases where taxpayers reporting (or lack thereof) of digital assets is inconsistent with their actual cryptocurrency transactions. In other words: the IRS is hiring outside contractors who are experts in cryptocurrency to help them identify cryptocurrency investors whose tax returns either omit or contain incorrect data regarding cryptocurrency transactions. There’s only one reason why the IRS would hire experts in cryptocurrency as outside contractors: because they plan to significantly increase the volume and scrutiny of cryptocurrency audits.