IRS solicits contractors to audit tax returns relating to cryptocurrency

The Internal Revenue Service (IRS) is looking for outside contractors to assist with calculating taxpayers’ gains or losses as a result of their transactions involving cryptocurrency.

An email from the IRS, published by Cryptotrader.tax on Tuesday, stated: "We are placing a few single-case contracts as pilots with a goal of publishing a solicitation and request for proposal for a larger multi-case contract."

The IRS is looking for a third party to aggregate cryptocurrency transactions from on-chain data, off-chain data, APIs, and tax submissions, and then value the assets involved, and then determine gains and losses.

The document notes that "specialized technology and infrastructure is required to digest, contain, and analyze virtual currency data due to unique requirements such as but not limited to decimal place precision, varying field formats, and file formats.”

Notably, the IRS hosted a summit on March 3 in a bid to open up dialogue on tax-related issues around cryptocurrencies. The agency invited cryptocurrency companies and advocates to the summit, which took place at its Washington D.C. headquarters.

The solicitation of help comes amid the IRS’s toughened stance on cryptocurrency tax evasion. In 2019, the agency sent out thousands of letters to cryptocurrency holders who allegedly failed to report their earnings. This year’s 1040 form also includes, for the first time, a question on taxpayers’ cryptocurrency activities.

The full solicitation document can be seen below: