U.S-based accounting company H & R has started operating as a middleman between cryptocurrency users and the Internal Revenue Service (IRS) after the agency began sending letters to crypto traders who may not have reported their income and pay taxes.
Per a September 24 news release, H & R Block has launched a new service targeting folks who have engaged in crypto transactions, specifically offering consultations on how to properly file their crypto gains and losses on tax returns.
The IRS started by sending letters to around 10,000 cryptocurrency investors, ordering some to amend their tax filings, while urging others to pay back taxes and/or interest and penalties.
Similarly, the head of IRS, Commissioner Chuck Rettiq, said:
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties.
“The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
The IRS collects data from cryptocurrency exchanges and compares it to every investor’s 1099-K report. If the information in the report do not match the data supplied by the exchanges, the IRS will send the CP2000 notice to traders, specifying the amount every investor is expected to pay within 30 days.
H & R Block joins other leading professional services firms who seek to solve crypto auditing issues. In June, Big Four company PWC released a new tool to its Halo auditing suite that can be utilized to
“provide assurance services for entities engaging in cryptocurrency transactions.”
In March, Ernst & Young introduced a tool designed to enhance accounting and tax calculations for cryptocurrency transactions by institutional clients that have crypto on their balance sheets, and people who trade cryptocurrency assets on a smaller scale.