The IRS turns its focus to cryptocurrency

On July 26, the Wall Street Journal reported that the Internal Revenue Service has mailed letters to over 10,000 cryptocurrency holders warning that those who fail to report income and pay tax on cryptocurrency transactions may be penalized. IRS Commissioner Chuck Rettig has stated that taxpayers should take the warnings “very seriously,” as the IRS is expanding its regulatory focus in this field.

Cryptocurrency is a form of virtual cash that allows payment to be sent online from one individual to another, while circumventing traditional financial institutions. Unlike paying online with a credit card or other traditional means of payment, cryptocurrency is based on underlying “blockchain” technology. Blockchain is a public ledger that records every cryptocurrency transaction. Blockchain in itself is often considered to be safer than traditional money transfers, because it can document, trace and verify the currency used in every transaction. 

Cryptocurrency has been largely unregulated thus far because it is so unique, complex and difficult to define.

Cryptocurrency transfers are anonymous, so they are frequently used to fund illicit activities. However, cryptocurrency is also in finite supply, so it is often used as a form of investment property rather than as the virtual cash it was intended to be.

Thus far, it appears that the most prevalent legal use of cryptocurrency is as an investment, and the IRS has made clear that it intends to tax it as such. Further regulation from the IRS is certain, but details are yet to be released. If you currently hold cryptocurrency or have in the past, we encourage you to contact our office for up-to-date guidance regarding this dynamic new currency.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on

Treasury Issues Final FDII Regulations
Ohio Sales Tax Holiday 2020
Use It or Lose It…Maybe: Gift Planning Considerations in an Unpredictable Election Year
Changes to Form 1023, Application for Tax Exemption under Section 501(c)(3)
Financial Boot Camp Series: Is Your Estate in Proper Order?
PA Unemployment Compensation Covid-19 Relief

Register to receive our weekly newsletter with our most recent columns and insights.

Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us

contact us

Map of Pittsburgh Office

One PPG Place, Suite 1700
Pittsburgh, PA 15222
p:412.261.3644     f:412.261.4876

Map of Columbus Office

65 East State Street, Suite 2000
Columbus, OH 43215
p:614.621.4060     f:614.621.4062

Map of Washington Office
Washington, D.C.

1660 International Drive, Suite 600
McLean, VA 22102