GAO: IRS needs to keep an eye on virtual currencies

The Internal Revenue Service (IRS) could do more to inform taxpayers dabbling in virtual currencies that their activities could be taxable, according to a new Government Accountability Office (GAO) report.

The GAO concludes that while the world of virtual currencies like bitcoins was rapidly changing, the IRS could do more to provide basic, informal information to taxpayers about how their online activities could result in a real-world tax bill. "The fact that misinformation is circulating and the possibility of growth in the use of virtual currencies outside virtual economies suggest that it would be prudent to take low-cost steps, if available, to mitigate potential compliance risks," the report states. The report was done at the behest of the Senate Finance Committee, which asked GAO to review virtual economies and the currencies they use for any potential tax issues and how the IRS might address them.