What could the IRS be reminding us about today during tax season?  Oh, yes of course – Virtual Currency transactions.  It is always interesting overhearing people talk about virtual currency as if it is a mythical creature that the IRS doesn’t know about.  Not only does the IRS know about the mythical BitCoin and the like, but the IRS is serious about tracking down who isn’t properly reporting the transactions. 

Here are a few key points from the IRS Newswire issue (IR-2018-71) today:

1. Virtual currency transactions are taxable by law just like transactions in any other property.  Take a look at IRS Notice 2014-21 for more information.
2. Failure to properly report may lead to audit and liability for penalty and interest.
3. “In more extreme situations,” which sounds really daunting right?  Failure to properly report may lead to criminal charges.  Tax evasion for instances can land you a trip to prison for five years and up to $250,000 in fines.  Filing a false tax return can lead to a three year stay in prison with up to $250,000 in fines.

Virtual currency is property and subject to general tax principles.  Don’t be misinformed, read the guidance from the IRS Notice 2014-21 here.

If you need help with a legal tax issue, call us at 877-622-5840 and schedule an appointment with a board certified tax law attorney*.

* Steven A. Grenier is certified by the Louisiana Board of Legal Specialization as a specialist in Tax Law and Estate Planning and Administration.

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