IRS URGED TO UPDATE CRYPTO TAX

IRS urged to update crypto tax. This guidance was the topic of a letter sent by a group of U.S. Lawmakers , to the IRS. They have asked for comprehensive guidance for taxpayers earning gains on cryptocurrency investments or transactions.  In an open letter sent to acting IRS commissioner David Kautter, representatives Kevin Brady, Lynn Jenkins, David Schwelkert, David LaHood and Brad Wenstrup write that the agency has had "more than adequate" time to develop clear rules on how cyrto currency related profits would be taxed. IRS urged to update crypto tax guidance has been an issue for some time it seems. Saying that it is "a key component of the IRS's duties" to provide such guidance, they said. IRS urged to update crypto tax.

The House Committee on Ways and Means, which Brady chairs, will also ask the Government Accountability Office to conduct an audit on the matter, the letter adds. Crypto advocate group Coin Center praised the letter in a blog post, with communications director Neeraj Agrawai noting that "currently, a user needs to calculate capital gains on every stick of gum they guy with crypto currency".

A portion of the letter stated the following, "Since the emergence of virtual currencies, the IRS has struggled with how to treat virtual currencies for tax purposes and the amount of guidance necessary to assist taxpayers in understanding their tax obligations. In March 2014, the IRS began working to assist taxpayers in related to virtual currencies by issuing guidance indicating that virtual currencies would be treated as property for tax purposes. Many taxpayers have run into tax debt, due to not knowing the crypto tax rules, and ended up needing Tax Resolution Companies assistance. Some needed Tax Professionals to help with the IRS Fresh Start Program, due to a IRS Wage Garnishment. However, in September 2016, the Treasury Inspector General for Tax Administration reported that the IRS had yet to develop a comprehensive virtual currency tax strategy, citing a need for the IRS to update its initial guidance to reflect the various uses of virtual currencies.

Despite the issuance of only preliminary guidance on the issue, the IRS has made enforcement of the guidance a priority, undertaking robust enforcement actions on a number of fronts. For example, the IRS has used its John Doe Summons authority to seek the records of approximately half a million Americans who held virtual currencies between 2013 and 2015.