The Internal Revenue Service has been short-staffed and underfunded for quite some time, which has resulted in specific issues not receiving the time and attention they actually require. For example, cryptocurrency tax evasion is a known problem, but there are not enough IRS agents available to devote their time to investigating potential cases. This is a problem that is about to change, however, which means those Connecticut residents who have cryptocurrency in their financial portfolios may need to prepare for the IRS to come calling.
According to a recently published article, the IRS is looking to hire outside consultants to investigate discrepancies in what taxpayers report on their tax returns concerning cryptocurrency versus trackable transactions. Various technology companies now have software available that allows for the obtaining of cryptocurrency transaction data through a number of sources. It is these companies that the IRS is looking to hire.
Who really needs to worry about this? Advanced traders will most definitely have their transactions checked, but so will individuals with smaller cryptocurrency accounts. In other words, no one will be immune. This is a big move for the IRS, which may increase the number of tax audits it performs on a yearly basis.
Connecticut residents who may have inaccurately reported their cryptocurrency gains and losses can get ahead of the game and deal with the situation long before the IRS reaches out to them. An experienced tax law attorney may be able to help with that. Those who are contacted in the future about discrepancies in reporting can also turn to legal counsel if they find themselves being audited or accused of tax evasion.