In the last few weeks, Coinbase users have been receiving letters from the IRS which informs them that they need to declare all cryptocurrency-related income and pay the property tax on it lest they risk facing penalties. These letters have been explained as being routine notices that are sent to those who are known to deal in cryptocurrency and are not a source for concern provided that the users of the currency are declaring their income and paying the recommended tax.

However, scammers have taken advantage of the situation and have sent fake letters claiming to be from the IRS to scam taxpayers out of their funds. According to an August 5, 2019 report. bogus letters attempting to capitalize on the legitimate ones have been sent by scammers soliciting payments with threats of action to be taken against them.

Scam IRS

Several strategies have been deployed by the scammers to dupe their victims and these include letters claiming that a warrant has been authorized against the recipients due to unpaid tax collections. The letters also say that failure to make immediate payment will lead to arrest and criminal action.

In a bid to make their false claims seem as authentic as possible, the criminals are using legitimate information relating to the recipient such as tax liens filed against them to gain their confidence. It should be noted, however, that liens are made publicly available and one in a letter does not mean that the letter being sent is any more legitimate otherwise.

These letters are demanding payment of tax owed to fake agencies such as the Bureau of Tax Enforcement which does not exist according to the IRS. Individuals are also being contacted over the phone which, as the IRS has pointed out, is never done by the agency and they will never threaten anyone with arrest or deportation.

According to the reports, there are some things to look out for to determine whether a letter is fake or legitimately from the IRS. Some of the things to look out for include a notice or a letter-number, the use of government envelope and the IRS seal, a 1-800 number which helps with the contacting of the agency as well as a note of the recipients’ tax ID number and tax years. Even as the IRS is trying to create better and more comprehensive tax code for cryptocurrency, they will also have to deal with scammers trying to imitate them in a brand new method.

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