IRS Reports Increase in Digital Asset Tax Investigations

IRS Commissioner Charles Rettig testified to the House Ways and Means Committee that the IRS is conducting more investigations into the taxation of digital assets, such as cryptocurrency.

The commissioner said that as of 2017, the agency had conducted more than 1,000 investigation into digital asset tax issues. Since then, that number has increased to approximately 3,000.

Rettig noted that the vast majority of taxpayers that possess digital assets are either not paying taxes on them or filing incorrect returns. He stressed that the agency has a duty to ensure that individuals who possess digital assets pay the necessary taxes.

The commissioner also noted that the agency is in the process of revising its guidance on digital assets. He said that the agency recently issued a new policy on accounting methods and filing requirements for those who hold digital assets. The new policy is intended to simplify the process for taxpayers who possess digital assets.

Finally, Rettig acknowledged that the technology surrounding digital assets can be complicated and difficult to understand. He highlighted the agency’s efforts to educate taxpayers and tax practitioners about digital assets and the necessary tax requirements.