The IRS is soliciting contractors to help it assess whether certain U.S. taxpayers have paid taxes on their crypto holdings.
May 12, 2020 | AtoZ Markets – The Internal Revenue Service (IRS), is looking for outside contractors to assist with calculating taxpayers’ gains or losses as a result of their transactions involving cryptocurrency. The email from the IRS, published by Cryptotrader.tax, further stated:
“We are placing a few single-case contracts as pilots with a goal of publishing a solicitation and request for proposal for a larger multi-case contract.”
Third-party would be responsible for calculating gains and losses
The IRS is seeking a third-party to aggregate cryptocurrency transactions from on-chain data, off-chain data, APIs, and tax submissions. The third-party will also value the assets involved, and then determine gains and losses.
The document notes that “specialized technology and infrastructure is required to digest, contain, and analyze virtual currency data due to unique requirements such as but not limited to decimal place precision, varying field formats, and file formats.”
The IRS hosted a summit on March 3 a bid to open up dialogue on tax-related issues around cryptocurrencies. The agency invited cryptocurrency companies and advocates to the summit that took place at the IRS’ Washington D.C. headquarter.
IRS solicitation comes amid its toughened stance on crypto tax evasion
The solicitation of help comes amid the IRS’s toughened stance on cryptocurrency tax evasion. In 2019, the agency sent out thousands of letters to cryptocurrency holders who allegedly failed to report their earnings. This year’s 1040 form also includes, for the first time, a question on taxpayers’ cryptocurrency activities.
Tax relief amid coronavirus outbreak
Recently, crypto taxpayers got temporary relief from the IRS. As a result of the COVID-19 outbreak, Americans were given an extra 90 days to pay their taxes without interest and penalties. This move likely impacted crypto investors, many of whom were owing as a result of trade activity in 2019.
The payment extension permits individuals to defer payments and interest on up to $1 million until July 15th. Businesses can defer up to $10 million. This unprecedented move has been taken in light of the growing economic hardships much of the public is experiencing. Several states have also granted deferments, with more expected to follow suit.
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