IRS Tax Notices for Bitcoin Users What's Going On?

Been seeing a lot about IRS tax notices for Bitcoin users saying they need to fix their tax reports. Just got one myself and I thought I was reporting everything right. Anyone know how they handle altcoin trading pairs for taxes? I heard before 2017 you could use some kind of "like-kind" rule to avoid taxes on trades.

Yeah the IRS hasn’t really clarified much on crypto and like-kind exchanges. For 2017 and earlier, it’s still kinda hazy. A lot of tax pros are playing it safe and saying different cryptos aren’t "like-kind." Maybe the 2018 tax code made it more obvious.

I was on Poloniex.

If Poloniex is US-based, they probably reported your trades to the IRS. Even if they didn’t, they could do it anytime if asked.

But did you cash out to USD through Coinbase? That seems to be a common link for people getting those IRS letters.

Poloniex doesn’t issue 1099-K forms like Coinbase does. They don’t report anything voluntarily to the IRS. Seems like the IRS is fishing for info. If they’re subpoenaing exchanges for your data, you might be facing an audit, not just a warning.

Yeah, I cashed out using Coinbase.

I think if there weren’t any tax laws at the time, you might not owe anything. Laws usually aren’t retroactive unless they state otherwise. But if there was a proposal, you might be affected.

I just assume my info is out there, regulators gonna find it. Avoiding taxes isn’t worth the risk. Centralized exchanges have all your details, so they can hand it over whenever.

Right? It’s weird they care more about crypto now when they used to ignore it. I bet they got your info from the exchange. That’s why KYC has raised so many eyebrows.

Best bet is to contact the IRS directly. Their support might give you the best info, but honestly, every situation is different. If it’s complicated, maybe get an accountant who won’t charge too much.

Most IRS agents don’t know much about crypto. They often send you away saying they’ll find out. Sometimes, we end up teaching them about new regulations. Seriously, you can find better help on forums than from the IRS.

Not every exchange reports all trades. They’re supposed to report unusual or random trades, so if you’re on a compliant exchange, they might be one of the ones reporting. OP, are you sure your numbers are accurate? If there’s a huge gap, the IRS will notice.

Poloniex said before they don’t do tax reporting. They might comply if the government asks, but that’s rare. They don’t send 1099s like Coinbase.

Sounds like OP got a 6173 letter, which usually means they were cashing out through Coinbase without reporting fully.

Didn’t the IRS tell major exchanges to submit info on crypto holders? Seems like they’re really cracking down.

Haven’t they been warning US traders about their tax obligations? I feel like they’re just trying to intimidate everyone into compliance. If you got another notice with calculations, better double-check your taxes and include trading fees.

If they’re checking trades, they probably don’t always need subpoenas. They can just do regular checks to see if taxpayers are compliant.

IRS can’t just go fishing for info. They had to battle Coinbase in court for data on about 13,000 traders. So I doubt Poloniex hands over data like that regularly.

How many trades or what amount do you need to hit to get a 1099 from Coinbase? What if I just want to hold my BTC in Coinbase without cashing out?