The Taxpayer Inspector General for Tax Administration (TIGTA) oversees the Internal Revenue Service (IRS) to ensure it operates efficiently and adheres to its duties. Recently, TIGTA issued a report on how the IRS enforces cryptocurrency regulations.

Increased Focus on Criminal Enforcement

TIGTA’s analysis reveals a significant shift in IRS strategies, with 50% of cryptocurrency enforcement actions moving towards criminal investigations rather than traditional audits. 

This shift reveals the IRS's preference for treating the underreporting of crypto income as tax evasion or fraud, rather than conducting time-consuming audits.

The Reality of Non-Compliance

It's estimated that about 75% of crypto investors fail to report their transactions on tax returns, or an estimated 24 million taxpayers. 

This underreporting triggers IRS notices, such as CP2501 or CP2000, informing recipients that there has been unreported income detected from crypto exchanges. These are a type of audit.

Immediate Actions Required

If you receive a CP2501 or CP2000 notice:

• Respond promptly and correctly.
• Engaging professional help from CryptoTaxAudit can lead to a swift resolution, potentially avoiding additional taxes.

For those who receive a CP59 notice, indicating unfiled tax returns despite known income:

• Immediate action is crucial.
• Contact CryptoTaxAudit to calculate your correct income, file the necessary returns, and prevent escalation.

The Risks of Non-Action

Ignoring these IRS notices can lead to severe consequences. The IRS is equipped with sophisticated tools and ample resources to pursue tax dues. 

They will initiate collection actions, seizing money and assets if necessary. 

Without proper response, these issues can extend into prolonged appeals, making life increasingly challenging.

Your Future Financial Health

In a burgeoning bull market, as crypto assets begin to increase in value, it’s vital to stay compliant with IRS regulations. 

Setting aside a portion of future earnings for back taxes is a prudent strategy to secure financial stability and peace of mind.

Conclusion

The IRS is advancing its methods and has the capability to track those evading taxes. 

It’s crucial for all crypto investors to ensure they are up-to-date with their tax obligations. 

If you have received a notice such as CP2501, CP2000, or CP59, contact our offices immediately for expert assistance. 

Staying proactive is key to managing your cryptocurrency investments responsibly. 

Visit CryptoTaxAudit to schedule a consultation and ensure you can focus on maximizing your investments while remaining compliant.