The IRS has launched a Virtual Currency (VC) Compliance campaign. The agency has sent letters to VC owners advising them to pay back taxes and file amended returns if needed. The IRS classifies your VC as property for federal income tax purposes. Thus, VC can create capital gains or losses just like stocks and bonds. If you receive it for services, (e.g. as in mining), then you have ordinary income. If services you provide are not as an employee, then you will be subject to self-employment taxes. A transaction includes VC you received or transferred for free, including from an airdrop or hard fork.
For the 2019 tax year the IRS has introduced a new question. Form 1040, Schedule 1 asks: At any time during 2019, did you receive, send, sell, exchange or otherwise acquire any financial interest in any virtual currency? The IRS had many video gamers worried recently when it listed many VCs as convertible. Convertible VC has an equivalent value in real currency. Bitcoin falls into this classification because it can be digitally traded between users and can be purchased or exchanged into USD and other real or virtual currencies.
However, the IRS has now backed off such a blanket classification. Bitcoin is now listed on the IRS website as the sole example of convertible VC. Therefore, you do not need to report game transactions in VC if the VC do not leave the video game environment. So the straight answer is yes, you might need to tell the IRS about your transactions in virtual currency.