In a letter sent from the House Ways and Means Committee on Wednesday, U.S. lawmakers are calling on the Internal Revenue Service (IRS) to issue more specific guidelines for taxes on digital assets. The letter lays out exactly what questions the Committee wants to be answered, with a deadline of “no later than Oct. 17, 2018.”
Chairman @RepKevinBrady led a letter to the IRS calling on them to issue more guidance for taxpayers who hold virtual currencies. More details: https://t.co/N9ykStYlCP
— Ways and Means (@WaysandMeansGOP) September 19, 2018
Replacing Outdated Laws
Currently, the IRS appears to be operating on a set of guidelines issued in 2014 to determine the tax obligations of U.S. citizens holding digital assets, wherein they classified digital assets like property, not currency, and declared they would be taxed accordingly.
Those guidelines, according to the letter, were supposed to be temporary. Yet four years later, they’re still being used to determine liability and, in some cases, to pursue punishment against cryptocurrency holders.
The five members of Congress behind the letter, including Chairman Kevin Brady, note that their previous letter, now a year past, addressing the same issue went unanswered, stating:
“On May 17, 2017, we wrote to the IRS to raise questions about the enforcement actions being taken against those holding virtual currencies and the lack of a comprehensive virtual currency strategy. More than a year after our initial letter, the IRS continues to expand its enforcement activities without issuing any further guidance for taxpayers.”
Holding up the System and a Possible Way Forward
This lack of additional guidance is holding up other areas of the system as well. The letter claims that the Treasury Inspector General for Tax Administration, the Association of International Certified Professional Accountants, and the American Bar Association all need further clarity surrounding digital asset tax laws and have noted that “the IRS had yet to develop a comprehensive virtual currency tax strategy” that reflects the various ways cryptocurrency is used.
Cryptocurrency advocacy groups are enthusiastic about the letter, echoing the sentiment that lax laws surrounding crypto are still far too murky. The D.C.-based nonprofit organization Coin Center lauded the letter on its blog, saying that:
“Right now, American cryptocurrency users who want to pay their taxes simply don’t know how to do so properly. This gray area is not only frustrating but can also create serious liabilities for well-meaning citizens.”
Related: The Investor’s Guide to Cryptocurrency Taxes
Congressional Reps. Jared Polis and David Schweikert, co-chairs of the Blockchain Caucus, have introduced a bill they hope will help solve the problems of crypto taxes and make digital currency easier for the vernal public to use, aptly entitled the Cryptocurrency Tax Fairness Act. Rep. Schweikert is also a member of the House Ways and Means Committee.
Adding that the Government Accountability Office will be undertaking an audit to assist the Committee, the letter concludes:
“We therefore strongly urge the IRS to expeditiously issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies.”
Cover Photo by Florian Wehde on Unsplash
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Original Post: CryptoSlate