Are crypto audits on the rise?

Significantly intensifying this need is the formation of a dedicated IRS team of criminal investigation professionals tasked with targeting taxpayers who do not report cryptocurrency transactions on their tax returns. This means that crypto audits will certainly be on the rise. So, what can accountants do to prepare for crypto audits?

Can a crypto exchange trigger an IRS audit?

Crypto holders can trigger an IRS audit under the following circumstances. Crypto exchanges can issue you three tax forms: Form 1099-K, Form 1099-B, and Form 1099-MISCs. If you don’t report the amounts reported on these forms on your tax return, you will receive a CP2000 letter and be subject to a correspondence audit.

Are you worried about IRS audits when dealing with cryptocurrency?

In light of these developments, taxpayers may be worried about their exposure to IRS audits when dealing with cryptocurrency. Knowing the ins and outs of IRS audits and how to avoid them could alleviate some of the fears. There are four types of IRS audits. Correspondence Audits. Correspondence audits are the most common type conducted by the IRS.