Many crypto holders are reporting their crypto transactions for the first time as a result of the United States Internal Revenue Service’s question about “virtual currency” on the 2019 tax return form.
It is a big question for some taxpayers — many have not reported their crypto gains in the past or may have done so without a great deal of precision. Should a taxpayer let bygones be bygones or file an amended return to accurately reflect their historical income from crypto? The IRS subpoenas of crypto exchanges for taxpayers’ trading histories certainly raise the stakes. To layer more on, statutes of limitations, potential penalties and/or IRS leniency may vary based on the degree of previous noncompliance.