The Internal Revenue Service wants a piece of the crypto action

"Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties"

Donald Trump might not be a fan of cryptocurrencies, but the Internal Revenue Service still wants its cut of the profits.

It is sending letters to 10,000 cryptocurrency holders, informing them that they need to report, and pay taxes on, their transactions and capital gains.

“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties,” Chuck Rettig, IRS Commissioner, said in a statement. “The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”

We should stress that this is not the US government recognising Bitcoin et al as a form of money. Rather, if people are making cash by trading and acquiring something, then that is seen as a taxable income.

Last year the IRS announced a Virtual Currency Compliance campaign to address tax noncompliance related to the use of virtual currency through outreach and examinations of taxpayers. It says that it will remain actively engaged in addressing non-compliance related to virtual currency transactions through such efforts as taxpayer education, audits and criminal investigations.

Trump tweets

Earlier this month, the US President launched into a crypto rant on Twitter. “I am not a fan of Bitcoin and other cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behaviour, including drug trade and other illegal activity,” he said.

Facebook Libra’s virtual currency will have little standing or dependability, he added. “If Facebook and other companies want to become a bank, they must seek a new banking charter and become subject to all banking regulations, just like other banks, both national and international.”

“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the world, and it will always stay that way. It is called the United States dollar!” Trump concluded.

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