Internal Revenue Service Sends New Round of Letters to Crypto Holders

Last week, the United States Internal Revenue Service sent another round of letters to crypto traders called CP2000.

These notices were sent to traders of some crypto exchanges due to inconsistencies found in their tax reports.

Using the information provided by third-party systems - such as crypto exchanges and payment systems - the IRS has been able to determine the amounts traders owe and included the amounts in dollars in the notices.

The regulation stipulates that all broker and barter exchange services are required by law to annually report trader activity on a 1099-B form, send it directly to the IRS and send a copy to the recipient.

The IRS has not yet published specific guidelines for crypto exchanges.

The users, at the same time, don't submit the IRS their copy of 1099-K, as they only use this form to calculate and report on their capital gains or loss report.

If the reports do not match the data provided by the exchanges, the IRS will send the CP2000 notice to traders.

It is important to understand that 1099-K reports for individuals trading crypto can be inaccurate in some cases, and does not include the cost basis, which is crucial for crypto trading calculations.

In crypto reports, you need to know how much it costs you and not only how much you got when you exchanged it.

The price you pay for it is called "Cost basis." Without it you will not have an accurate report on crypto.