Lawmakers want IRS to issue urgent guidance on crypto taxes
Crypto taxes are still an area that is marred by ambiguity and vagueness and U.S. lawmakers have decided to take action. According to a press release by the U.S. Congress, 21 lawmakers sent a bipartisan letter to the Internal Revenue Service (IRS) requesting guidance on crypto taxes.
The 21 representatives sit in the Congressional Blockchain Caucus, chaired by Minnesota Rep. Tom Emmer. In the letter sent to the IRS on April 11, Emmer stated that taxpayers deserve clarity on federal taxation of the emerging value exchange system.
Emmer reminded the IRS that a decade ago in 2008, it identified ambiguous tax treatment of virtual property and currency transactions as one of “the most serious problems encountered by taxpayers. Six year later in 2014, the IRS released preliminary guidance on the issue. However, back then, virtual currencies weren’t as popular as they are now. The guidelines have thus failed to encompass all the intricacies of the new asset class.”
“While initial guidance was provided, ambiguity around basic questions of how taxpayers should calculate and track the basis of their virtual currency holdings is unacceptable,” according to the lawmakers.
The press release cited a report by CoinCenter which found that American tax payers still lack basic knowledge on crypto taxes. The Washington-based crypto advocacy organization criticized the IRS for its laxity on the matter. It stated:
“Rather than indicating any intention to provide additional guidance, the IRS seems to be ramping up enforcement activities against taxpayers who ‘misreport’ the tax consequences of their cryptocurrency transactions.”
Among the urgent matters that Rep. Emmer asked the IRS to address is its treatment of forks for taxpayers. He also asked for clarity on the specific methods the IRS uses to calculate the cost basis of cryptos.
Emmer concluded by urging the IRS to treat the matter with urgency, especially in light of the approaching tax day. He stated:
“Guidance is long overdue and essential to proper reporting of these emerging assets. The bipartisan support this letter has received should send a clear message to the IRS that clear guidelines for reporting virtual currency are necessary. My colleagues and I are optimistic that the IRS will issue the guidance needed for taxpayers struggling with these reporting requirements.”
Emmer requested that the IRS sends a written response describing its efforts to update its crypto tax guidance by May 25.
Last year, an IRS report indicated that the crypto community owes it more than $25 billion. At the time, the size of the crypto industry was $211 billion.
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