IRS Sending Inaccurate Letters to Thousands of Crypto Investors Claiming Taxes

error08

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Quote from: Lorence.xD on December 02, 2020, 01:51:29 AM

Quote from: figmentofmyass on November 25, 2020, 04:34:04 PM

this looks more like IRS incompetence to me. they know perfectly well that 1099-Ks do not show gains/losses. sending CP2000s based on gross activity is just a lazy way for them scare taxpayers either into paying more money or hiring a tax attorney to sort it out.

i feel bad for anyone receiving these letters. i wonder what the odds of an audit are if you don't amend or agree to the IRS' changes. it's gotta increase your chances. i'm just glad i've managed to stay under the 1099-K threshold. what a headache.

it's not just coinbase. kraken, gemini, and probably others send them too.

Good thing that in my country, we do not have to worry about this because they are indifferent to it and most cryptocurrency converted in fiat is already taxed when most people withdraw them and god bless cash applications because they add another layer of security for would be withdrawed money using their services, no tax just pay the percentage and you are good to go.

there will always a loophole to avoid taxes, but inaccurate letters for dozens of citizens from the IRS is really something, how could someone who had incurred $2,000 of cryptocurrency investment losses, they should do better than this. Yeah, that's what they have to deal with as american citizens, fortunately for people who live in a country that doesn't ask for taxes on our capital gains.

Lorence.xD

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Quote from: figmentofmyass on November 25, 2020, 04:34:04 PM

this looks more like IRS incompetence to me. they know perfectly well that 1099-Ks do not show gains/losses. sending CP2000s based on gross activity is just a lazy way for them scare taxpayers either into paying more money or hiring a tax attorney to sort it out.

i feel bad for anyone receiving these letters. i wonder what the odds of an audit are if you don't amend or agree to the IRS' changes. it's gotta increase your chances. i'm just glad i've managed to stay under the 1099-K threshold. what a headache.

it's not just coinbase. kraken, gemini, and probably others send them too.

Good thing that in my country, we do not have to worry about this because they are indifferent to it and most cryptocurrency converted in fiat is already taxed when most people withdraw them and god bless cash applications because they add another layer of security for would be withdrawed money using their services, no tax just pay the percentage and you are good to go.

DaveF

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Quote from: sheenshane on November 27, 2020, 09:03:06 AM

It appears to me that, this is negligence on the part of Coinbase and it is horrible that you will be paying such a huge tax that you incurred but not aware of in the first place. IF I'm in their shoes I will definitely be in a state of shock or became hysterical once I receive the notice asking me to pay $127k.

On the positive side to those who haven't received this notice like me, that we should start we could come up to a conclusion if Coinbase is still worth trusting since they have caused us a lot of trouble with the IRS but IMO, I should start avoiding Coinbase in any of my crypto activities.

You don't have to pay anything because of the form. You just have to let the IRS know what your actual gains / losses were.
In theory if you have been making a profit you should have been reporting anyway. And if you took a loss it's silly not to write it off.

Quote from: figmentofmyass on November 26, 2020, 02:27:37 PM

...
the 1099-K, in some ways, is good for us. if you can manage to stay below $20k or 200 transactions in gross activity, exchanges do no tax reporting at all. if they issued a more "appropriate" 1099, like the 1099-B that broker dealers normally issue, the IRS would be receiving a 1099 for you every time you sold a few bucks worth of bitcoin.
...

Is it OR or is it AND?
I have always been under the impression that you had to go over both. You can have 500 transactions for $3.99 each and although you should many places will not report. 500 transactions for $4.01 each and you get a 1099-K

-Dave

sheenshane

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It appears to me that, this is negligence on the part of Coinbase and it is horrible that you will be paying such a huge tax that you incurred but not aware of in the first place. IF I'm in their shoes I will definitely be in a state of shock or became hysterical once I receive the notice asking me to pay $127k.

On the positive side to those who haven't received this notice like me, that we should start we could come up to a conclusion if Coinbase is still worth trusting since they have caused us a lot of trouble with the IRS but IMO, I should start avoiding Coinbase in any of my crypto activities.

figmentofmyass

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Quote from: winrate.io on November 26, 2020, 07:12:19 AM

So Coinbase sent the wrong version of 1099 to the IRS, and now its customers are getting gigantic tax bills for 2018. Such massive incompetence on the part of coinbase!!!

it wasn't the wrong version per se. the 1099-K wasn't designed for capital gain/loss reporting, but i'm almost positive it's the IRS pushing exchanges to issue them because all the regulated american exchanges are doing it. it's not just coinbase.

the 1099-K, in some ways, is good for us. if you can manage to stay below $20k or 200 transactions in gross activity, exchanges do no tax reporting at all. if they issued a more "appropriate" 1099, like the 1099-B that broker dealers normally issue, the IRS would be receiving a 1099 for you every time you sold a few bucks worth of bitcoin.

that's actually what cash app is doing. if you sell $4 worth of bitcoin on cash app, the IRS is gonna know about it:

so who is worse---coinbase/kraken/gemini/bittrex with their 1099-K or cash app with their 1099-B? the IRS clearly wants something.

mich

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This is really scary thing is reality because we are supposed to trust the government when it comes to paying taxes. Most just py as they are instructed to to further avoid penalties.

They say we owe them taxes and we are to pay it as they ask. I would be at lost for myself and in tons of trouble if I was sent a bill for $127,000 from the IRS on behalf of Coinbase.

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Quote from: bobthebuildr on November 23, 2020, 04:56:58 PM

Pretty crazy how Coinbase incompetence is effecting so many people...

https://cryptotrader.tax/blog/cp2000-cryptocurrency-notice

So Coinbase sent the wrong version of 1099 to the IRS, and now its customers are getting gigantic tax bills for 2018. Such massive incompetence on the part of coinbase!!!

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Quote from: figmentofmyass on November 25, 2020, 04:34:04 PM

Quote from: bobthebuildr on November 23, 2020, 04:56:58 PM

Pretty crazy how Coinbase incompetence is effecting so many people...

https://cryptotrader.tax/blog/cp2000-cryptocurrency-notice

this looks more like IRS incompetence to me. they know perfectly well that 1099-Ks do not show gains/losses. sending CP2000s based on gross activity is just a lazy way for them scare taxpayers either into paying more money or hiring a tax attorney to sort it out.

i feel bad for anyone receiving these letters. i wonder what the odds of an audit are if you don't amend or agree to the IRS' changes. it's gotta increase your chances. i'm just glad i've managed to stay under the 1099-K threshold. what a headache.

it's not just coinbase. kraken, gemini, and probably others send them too.

A friend of mine from the States sent me a txt about that. He is in talks with his tax consultant to see how to proceed from there.
I always told him not to use Coinbase but I guess you are right, the IRS can ask all those exchanges for data.

figmentofmyass

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Quote from: bobthebuildr on November 23, 2020, 04:56:58 PM

Pretty crazy how Coinbase incompetence is effecting so many people...

https://cryptotrader.tax/blog/cp2000-cryptocurrency-notice

this looks more like IRS incompetence to me. they know perfectly well that 1099-Ks do not show gains/losses. sending CP2000s based on gross activity is just a lazy way for them scare taxpayers either into paying more money or hiring a tax attorney to sort it out.

i feel bad for anyone receiving these letters. i wonder what the odds of an audit are if you don't amend or agree to the IRS' changes. it's gotta increase your chances. i'm just glad i've managed to stay under the 1099-K threshold. what a headache.

it's not just coinbase. kraken, gemini, and probably others send them too.

bobthebuildr

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Pretty crazy how Coinbase incompetence is effecting so many people...

https://cryptotrader.tax/blog/cp2000-cryptocurrency-notice

Topic: IRS Sending Inaccurate Letters to Thousands of Crypto Investors Claiming Taxes (Read 237 times)