US lawmakers write to IRS to issue “comprehensive” crypto taxation guidance
More than a year after their initial letter to the Internal Revenue Service (IRS), U.S. lawmakers have again called on the IRS to issue a “comprehensive” crypto taxation guidance, in an open letter submitted on Wednesday.
The letter 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 letter was sent to acting IRS commissioner David Kautter and was signed by Congress members David Schweikert, Darin LaHood, and Brad Wenstrup, Kevin Brady and Lynn Jenkins.
Still no clarity over crypto taxation
The representatives believe that the IRS had “more than adequate time” to frame the guidelines about crypto taxation after the initial framework was set in place four years ago. In March 2014, IRS issued initial guidelines which said that cryptocurrencies would be treated as property for tax purposes. But nothing came after that and the guidance governing cryptocurrencies still hangs in balance.
The lawmakers go on further to say that in September 2016, the Treasury Inspector General for Tax Administration had reported that the IRS crypto tax strategy was incomplete, and had already called for updated guidance at the time.
However, the lawmakers make it clear in no uncertain terms that the IRS has never shied away from its responsibility:
“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.”
The letter also highlights tough measures taken by the IRS in the past, which includes its decision to seek the records of approximately half a million Americans who held virtual currencies between 2013 and 2015. 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 lawmakers argue that while the IRS has time and again reminded taxpayers of the penalties for non-compliance, it has failed to provide a comprehensive taxation framework that would help authorities to expeditiously audit virtual currency transactions and those found guilty of any wrongdoings can be brought to law.
The representatives conclude the letter by calling for the IRS to act fast and issue more robust guidance on cryptocurrencies. They have also given the agency an October 17 deadline to provide all the details of their efforts to issue updated guidance to the Ways and Means Committee.
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