US Lawmakers Urge IRS Develop Clear Rules on Cryptocurrency-related Profits Taxation

| Updated
by Julia Sakovich · 3 min read
US Lawmakers Urge IRS Develop Clear Rules on Cryptocurrency-related Profits Taxation
Photo: 401(K) 2012 / Flickr

U.S. lawmakers have called on the Internal Revenue Service to clarify a guidance for taxpayers earning gains on cryptocurrencies.

More than a year has passed since the moment when U.S. lawmakers addressed their first letter to the Internal Revenue Service (IRS) with a view to clarify things regarding taxation related to crypto assets. Now Congress members have turned to the IRS in an open letter again.

The letter, sent to David Kautter, acting IRS commissioner,and signed by Congress members David Schweikert, Darin LaHood, and Brad Wenstrup, Kevin Brady and Lynn Jenkins, says:

“More than a year after our initial letter, the IRS continues to expand its enforcement activities without issuing any further guidance for taxpayers. We, therefore, write again today to strongly urge the IRS to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using cryptocurrencies.”

The lawmakers expressed their opinion that the Revenue Service had enough time to present the comprehensive guidelines for taxpayers who should report their profits that they got through investing in cryptocurrency assets, especially given the fact that the initial framework for making these things clear was set in place four years ago.

The IRS published its initial guidelines in March 2014. In this document, it was stated that for tax purposes, cryptocurrencies should be viewed as property. Nevertheless, no further information has followed the issued guidelines and there is still little clarity in this sphere.

Two years later, in September 2016, the Treasury Inspector General for Tax Administration announced that the crypto tax strategy offered by the IRS was incomplete. At the same time, the IRS was called to update the guidance. The Association of International Certified Professional Accountants and the American Bar Association have also asked the agency to provide additional information for taxpayers. But no clarity has been added.

The lawmakers noted in their letter:

“Despite the issuance of only preliminary guidance on this issue, the IRS has made enforcement of this guidance a priority, undertaking robust enforcement actions on a number of fronts. At the same time, the IRS also announced that it would not be providing leniency for taxpayers by allowing for a voluntary disclosure program to address tax non-compliance related to virtual currencies.”

The authors of the letter also paid attention to the fact that in the past the IRS took rather tough measures in respect to cryptocurrencies. For example, the agency has taken a decision to collect the records of nearly half a million of American residents who held digital assets between 2013 and 2015. In addition to this action, in July of 2018, the IRS launched a campaign aimed at reaching those who had failed to comply with taxation regulations related to cryptocurrencies.

According to the lawmakers, if the IRS had found time to remind taxpayers of the penalties that they could face with in case of non-compliance, it had to find time to provide a comprehensive taxation framework. At the end of the letter the lawmakers requested the IRS to prepare more robust guidance on cryptocurrencies no later than October 17, 2018. It is also said that the Government Office of Accountability will be asked to conduct an audit of the matter.

Altcoin News, Bitcoin News, Cryptocurrency news, Editor's Choice, News
Julia Sakovich
Editor-in-Chief Julia Sakovich

Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.

Related Articles

By August 29th, 2020
Altcoin NewsBitcoin NewsCryptocurrency newsNews Exclusive: Sovos’ Wendy Walker Says Tax Havens Won’t Be Around for Too Long
By August 29th, 2020

Only last year, the IRS disclosed they had a meeting with four other states in an effort to partner to fight cross-border tax evasion stemming from digital currency users. Last week in the U.S., the IRS released the draft 2020 tax form, with a crypto tax question smack in the middle of the front page.