“Clarify Crypto Tax Guidance” – US Representatives to IRSSeptember 21, 2018
As a way of addressing the manner in which Cryptocurrencies are currently taxed, a committee made up of bureaucrats and politicians in the United States of America has sent an open letter to the IRS – Internal Revenue Service.
In that letter that was directed to Mr. David Kautter, the commissioner for Internal Revenue Service, the representatives want IRS to publish the provisional guidelines on how the investments and operations of the Cryptos should be addressed each time a citizen of the US files their taxes.
The Long Struggle
For a long time, the Internal Revenue Service has been struggling with the best ways of handling the digital coins in as far as tax purposes are concerned. Kevin Brady, while flanked with a number of other US representatives decided to have this matter solved once and for all. Their main issue being how virtual coins such as Bitcoin and Ethereum are currently being taxed.
At the moment, the current guidance for taxpayers is to file the transactions that are carried out while using a virtual coin, since each transaction is considered as a taxable event. IRS classifies the Cryptocurrencies as property or commodity, and so they are also subject to the law governing capital gains. In the open letter, the politicians drawn from various states have come up with laws that are definitive and less confusing than the current guidelines.
Previous Representatives’ Letter
While explaining their point further, Brady went ahead to state that they had written a similar letter on the 17th of May 2017, raising the same issues being raised at the moment. In that previous letter, the lawmakers requested for a detailed virtual coin strategy.
They went further to note that since the time the last letter was sent, the tax body has not been bothered and has continued to expand its crackdown on businesses and persons using the digital assets without having their taxes filed.
This has prompted them to write another letter, urging the Internal Revenue Service to offer updated guidance that would give more clarity for the taxpayers looking for information on how to adhere to their tax obligations while using the Cryptocurrencies.
Taxpayers Don’t Understand the Tax Code
It has become evidently clear that IRS is active in urging taxpayers to pay, but fail to offer guidance on how to file. In the letter, the question of how taxpayers would be able to obey the tax laws if they do not even understand the tax code guiding the digital currencies. The latter has also quoted the sentiments of the Inspector General for Tax Administration at the US Treasury, in which he confirms that Internal Revenue Service has not come up with a comprehensive Cryptocurrency tax strategy.
The inspector general has also cited an urgent need for the tax unit to update its initial guidance. But despite all these happenings, the representatives’ letter has noted that enforcement has been made a top priority by IRS, and the body has been involved with a number of tax actions on several fronts.
The House of Representatives has noted that the IRS has not failed on their duty of reminding the taxpayers on the fines and penalties for non-compliance, but has terribly failed in one area; educating the taxpayers on how to file in their returns, especially those in the world of Cryptocurrencies.