US Congressmen Seek Clarity on Crypto Taxation From The IRS

By Prashant Jha

People’s representatives from the Congress of the United States has recently sent in a bipartisan letter to the IRS (Internal Revenue Service) as part of a joint request to seek more clarifications about how crypto taxes should be filed. An announcement was made on the 11th of April, to communicate this to the public.

As a press release published on the official website of Congressman Tom Emmer (who was one of the people to have sent in the letter) notes:

“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,” and nearly five years since the IRS released preliminary guidance on the issue.”

Considering this situation, the Congress members have urged the top body to issue clarifications just days before the tax declaration deadline of 15th April arrives.

21 Congressmen reportedly came together to send the said letter to the IRS, which is the chief regulatory authority as far as taxation is concerned. The deadline for filing federal income tax returns is fast approaching and the IRS is yet to clarify how it plans to treat cryptocurrencies, whether it plans to continue to treat it as a part of capital gains tax.

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The letter notes that the IRS had indeed released a directive 5 years back in 2014 but that had been shot down by the Inspector General for Tax Administration for being inadequate. Since then, the role of virtual currencies within the tax regime has not been effectively clarified.

Tom Emmer, one of the signatories to the letter said:

“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.”

The letter specifically asked the IRS to state adequate methods for calculating the cost basis, cost basis assignment and lot relief of these cryptocurrencies. In addition, it also sought clarity on how to tax crypto hard forks like Bitcoin Cash etc.