T

he deadline for Americans to file their taxes is tomorrow, April 15th. The IRS  (Internal Revenue Service) has yet to provide a clear guideline regarding basic reporting requirements for tax payers that use digital currencies.

Back in 2014, the IRS has published a guideline in relation to cryptocurrency but has not been updated since. Advances in this field left a lot of unanswered questions for the public. 21 U.S. lawmakers have presented a letter to IRS commissioner Charles Rettig on April 11, asking for urgent response concerning this situation.

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In the letter, they urged for instructions on the three main issues:

1) Acceptable methods for calculating the cost basis of virtual currencies.

Which specific methods does the IRS consider to constitute ‚Äúa reasonable manner that is consistently applied,‚ÄĚ as required by Notice 2014-21?

2) Acceptable methods of cost basis assignment and lot relief for virtual currencies.

Do taxpayers need to use specific identification whenever they spend or exchange virtual currency, or are other methods, such as first-in-first-out or average cost basis, acceptable as well?

3) The tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.

The letter was signed by Members of Congress including Tom Emmer, Bill Foster, David Schweikert, and Darren Soto.

2019_IRS letter_Final.pdf

The IRS has not been helpful in the past with cryptocurrency related issues when they ignored a letter from Kevin Brady, the chairman of the House Ways and Means Committee, in September 2018.

The congressmen have requested a written response from the IRS by May 15, 2019 discussing issues related to cryptocurrency guidance, which is a month after the US Tax day.

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Updated on
October 15, 2019
 in 
Regulation
 category

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