IRS insider reveals IRS crypto letter campaign method on Reddit

irs crypto letter campaign

A Reddit user claiming to be an Internal Revenue Service (IRS) employee has turned IRS insider revealing details of IRS crypto letter campaign for taxation purposes.

The account has been created in the name IRS_Throwaway_BTC and the “IRS employee” claims that he has been working in the IRS for many years and has worked on similar letter campaigns to tax evaders in the past.

The post explains that the IRS is using the first world war era propaganda technique to scare the people into thinking that the IRS is on to them. However, they are actually retorting to the letter sending campaign for two reasons.

IRS is short on resources?

The alleged IRS employee claims that the IRS simply does not have the resources to carry out large scale operations against people evading cryptocurrency or any other kind of tax. They retort to the letter sending campaigns to scare as many people as they can to submit their tax returns voluntarily.

The reason seems plausible since to carry out large scale operations to detain every tax evader one by one is a long tiring process.

Does the IRS have bad data on taxpayers?

The report further “reveals” that the IRS essentially cannot execute the operation even if they had the manpower due to lack of authentic data.

The post claims that the IRS does not have accurate data on each taxpayer; therefore they lack the essential information to build a case. After all, the IRS cannot risk an action without concrete proof.

The post explains,

“They are almost certainly joining up some of their internal tax filing database tables with external datasets (probably coinbase) and trying to estimate how much they think you owe.

For example, the coinbase data might have shown that you sold $20K worth of BTC in 2014 but your tax filings only show that you paid taxes on approximately $5K.

And that could be because you had a $15K loss on Bitfinex but the IRS doesn’t know that because they don’t have any Bitfinex data and you didn’t make this clear on your taxes.

Or maybe you reported the transactions with the loss as “crypto” and they only joined the data with a clause searching for “BTC” or “bitcoin”. It just *appears* from their incomplete picture that you might owe more than they see that you’ve paid.

For the people that actually didn’t pay or underpaid, they’re trying to scare you into paying what you actually do owe.

Based on my experience with the IRS, that’s a best-case scenario on their part. Whatever they’re actually doing is probably much more error-prone and dirty. Their own internal taxpayer database tables have horrific data quality problems.”

The letter has given way to a discussion on Reddit and a crypto trader and investor expressed that he wants to move to Puerto Rico where the capital tax gain is 0 percent (0%) just because he is not happy of the U.S taxation system.

The campaign is definitely doing IRS more bad than good in terms of taxation when it comes to the cryptocurrency sphere.

Saad B. Murtaza

Saad B. Murtaza

Journalist, Writer, Editor, Researcher, and Strategist with over 10 years of experience in the digital, print and public relations industries, Saad has been working with the mantra, Creativity, Quality and Punctuality. In his waning years promises to build a self-sustaining institute that provides free education. Carrying a diverse portfolio he has studied and written on topics related to cyber crimes, scams, blockchain, and cryptocurrencies.

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