Article source: Financial sector original title: "The US Internal Revenue Service sent a letter to the currency circle: come over to pay taxes or may be subject to criminal prosecution"
The Internal Revenue Service announced on Friday that it is writing to US citizens who have virtual currency, may not have paid the necessary taxes, and US citizens who did not correctly file a digital asset tax last year.
Chuck Rettig, head of the US Internal Revenue Service (IRS), said in a press release.
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“Taxpayers should take these letters seriously, review their tax filings, and modify past tax returns to repay taxes, interest and fines when appropriate. The IRS is expanding our efforts in virtual currency, including Use of data analysis."
The agency said it started sending letters last week and that 10,000 taxpayers will receive these letters by the end of August. The list was obtained through "all kinds of compliance work being carried out by the IRS." The US Internal Revenue Service said that in some cases, taxpayers may be subject to criminal prosecution.
According to the guidance issued in 2014, the IRS treats all virtual currencies, including Bitcoin, Ethereum and Ripple, as property under US tax law. This means that, like real estate, selling cryptocurrencies or exchanging other goods with them is also a taxable activity. Similar to stocks, digital currency holders must also report capital gains and losses on cryptocurrency transactions.
Most transactions are credited to short-term capital gains, which can be as high as 39% depending on the level of income. However, those who hold Bitcoin for more than a year and sell it only need to pay long-term capital gains tax, which is much lower, ranging from 15% to 23.8%.
Warren Davidson, a member of the House Financial Services Committee and a member of the Republican Party in Ohio, is one of the parliamentarians pushing the blockchain bill, including the revision of the tax code. Earlier this year, he and his co-sponsors proposed a bill to exempt cryptocurrencies from federal securities laws that apply to traditional stocks. The issue of cryptocurrency taxation has recently received more attention as Facebook has released the Libra white paper on digital currency.