WASHINGTON, D.C. - Following Congressman Tom Emmer's (MN-06) bipartisan letter, led along with his fellow co-chairs of the Congressional Blockchain Caucus calling on the Internal Revenue Service (IRS) to issue guidelines for reporting virtual currency on tax day, the agency expressed their intent to publish guidance.
Specifically, in his response, IRS Commissioner Charles P. Rettig stated, "I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance." The letter outlined three areas that the IRS intends to publish guidelines for: acceptable methods for calculating cost basis, acceptable methods of cost basis assignment, and the tax treatment of forks.
Upon receiving this letter, Congressman Emmer issued the following statement, "I am glad to hear of the IRS' plans to issue guidance on this important issue. Taxpayers deserve clarity on several basic questions regarding federal taxation of these emerging exchanges of value. I look forward to seeing their forthcoming proposal, and working together to serve the American taxpayers."
In 2014, the IRS issued guidance which treats digital assets like property. Since then, no further direction has been issued on a number of reporting questions. Further, it has been over a decade since the IRS National Taxpayer Advocate identified, in its 2008 Annual Report, that the ambiguous tax treatment of virtual property and currency transactions was one of “the most serious problems encountered by taxpayers.”
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 a recent report from Coin Center, the 2014 guidance by the IRS failed to address fundamental tax questions, and repeated requests to the IRS for additional clarity have been made by a variety of entities. It also indicates that rather than providing clarity, the IRS has instead increased enforcement activities against taxpayers who “misreport” their cryptocurrency transactions. As a member of the House Financial Services Committee, Congressman Emmer has worked to end the practice of “Regulation through Enforcement” and ensure the rules of the road are clear to taxpayers and businesses alike.
Read the original letter here.
Read the response letter here.