The Treasury Inspector General for Tax Administration recently released a report indicating that changes may be in the works regarding the assertion of accuracy-related penalties in examinations handled by the Internal Revenue Service's large business and international division. The report strongly indicates that large business and international examiners and their supervisors will increase their scrutiny of accuracy-related penalty criteria in examinations.
US taxpayers are generally taxable on income earned worldwide, regardless of the manner in which that income is paid (eg, currency (foreign or domestic) or property (tangible, intangible or virtual)). Therefore, if cryptocurrency has been bought, sold or exchanged, those transactions could be subject to federal tax. If the cryptocurrency is held offshore, a number of offshore reporting obligations could also apply to these holdings.