United States-based accounting firm H&R Block has begun serving as an intermediary between crypto users and the Internal Revenue Service (IRS) after the agency began sending letters to crypto traders who may have failed to report income and pay taxes.
According to a Sept. 24 news release, H&R Block has rolled out a new service targeting people who have engaged in digital currency transactions, specifically providing consultations on how to properly file their cryptocurrency gains and losses on tax returns.
The IRS expands efforts involving virtual currency
The IRS initially sent letters to 10,000 crypto investors, asking some to amend their tax filings, while compelling others to pay back taxes and/or interest and penalties. At the time, the head of the IRS, Commissioner Chuck Rettig, said:
“Taxpayers should take these letters very seriously by reviewing their tax filings and when appropriate, amend past returns and pay back taxes, interest and penalties. The IRS is expanding our efforts involving virtual currency, including increased use of data analytics. We are focused on enforcing the law and helping taxpayers fully understand and meet their obligations.”
The IRS collects data gathered from crypto exchanges and compares it to every trader’s 1099-K report. If the reports do not match the data provided by the exchanges, the IRS will send the CP2000 notice to traders, specifying the amount every trader is expected to pay within 30 calendar days.
Other companies providing tax calculations
H&R Block thus joined other major professional services companies who aim to solve cryptocurrency auditing issues. In June, Big Four firm PwC released a new tool to its Halo auditing suite that can be used to “provide assurance services for entities engaging in cryptocurrency transactions.”
In March, Ernst & Young launched a tool designed to improve accounting and tax calculations for digital currency transactions by institutional customers that have cryptocurrency on their balance sheets, and individuals who trade crypto assets on a smaller scale.