The IRS took to Twitter on August, 26, posting a video about recently mailed CP2000 notices, of special interest to crypto traders. The notice, which seeks to rectify discrepancies made by recipients in tax reporting, is another in a series of crypto-related letters recently sent by the agency. Though the promised guidelines for reporting still haven’t been delivered, crypto holders are nonetheless expected to magically know how to file. Some might even be surprised to learn that exchanges are sharing their financial info with the agency.
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It’s Not an Audit, It Just Works Like One
The CP2000 notice is not strictly a crypto-related notice like notices 6173, 6174 or 6174-A, but because of the large role exchanges now play in cryptocurrency trading, and the information they release to the IRS, some taxpayers will have reported earnings that do not match the records of the exchanges they utilize. With previously promised guidelines still not issued, the likelihood of discrepancy is arguably large. These letters are not just friendly reminders, either, but come with real threats of severe punitive action. According to hrblock.com:
CP2000 notices aren’t audits, but they work the same. It’s important to fully respond by the IRS deadline.
Many exchange users might be wondering how or from where the IRS got their tax info. It’s worth noting that U.S. law requires all broker and barter exchange services to report individually — via a 1099-B — for “each person” for whom they facilitated trading of “property or services.” What’s more, the CP2000 notices
