An official of the U.S. Internal Revenue Service (IRS) has clarified that the agency is prepared to seize cryptocurrencies and sell them to satisfy tax collection if taxpayers fail to meet their tax obligations.
Robert Wearing, IRS’ deputy associate chief counsel for Procedure & Administration, explained Wednesday that the agency can seize cryptocurrencies from taxpayers, Bloomberg reported. This clarification was made at a virtual conference hosted by the American Bar Association’s tax section.
He referenced the IRS notice published back in 2014 which states that “For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.” As with all other types of property, cryptocurrencies can be seized, the official reiterated.
Wearing was quoted as saying:
Bottom line: The IRS will seize that property and will attempt to follow its usual procedures to sell it and use it to satisfy collection.
Carolyn Schenck, a national fraud counsel in the IRS Office of Chief Counsel, said Thursday that the agency has boosted its revenue by more than $20 million from enforcing crypto taxation, the publication conveyed. About $13 million were generated from tax assessments based on returns amended after the IRS sent warning letters to more than 10,000 cryptocurrency holders in July 2019.
The IRS recently obtained court approvals to serve John Doe summonses to cryptocurrency exchanges Kraken, Circle, and Poloniex, similar to what it previously served Coinbase. The tax authority seeks information on crypto traders who “conducted at least the equivalent of $20,000 in transactions in cryptocurrency during the years 2016 to 2020.”
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