21 US Lawmakers Urge IRS (Again) to Clarify Crypto Tax Rules
With the deadline for Americans to file their taxes days away, more than 20 U.S. lawmakers have again urged the Internal Revenue Service (IRS) to provide clarity on cryptocurrency questions.
The lawmakers’ letter, addressed to IRS Commissioner Charles Rettig, explains that taxpayers may find it difficult to calculate how much they owe the agency due to unanswered questions about how the IRS is treating various cryptocurrencies.
The IRS issued guidance on the subject in 2014, but has not updated its guidance to acknowledge forks and other advances in the space since.
The bipartisan letter was signed by Reps. Tom Emmer, Darren Soto, David Schweikert, Warren Davidson and Ted Budd, among other lawmakers, and comes more than half a year after the IRS ignored a similar letter sent last fall.
“There is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies,” Thursday’s letter explains.
The document lays out three specific areas where the lawmakers believe there is an “urgent need” for guidance:
Acceptable methods for calculating the cost basis of virtual currencies. Which specific methods does the IRS consider to constitute “a reasonable manner that is consistently applied,” as required by Notice 2014-21?
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?
The tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.
However, the lawmakers say that these questions are not a complete list of topics that need clarity.
The Congressmen “urge the IRS to issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies,” and asked for a written response outlining how the IRS might develop this guidance by May 15 – a month after Tax Day.
Tom Emmer photo via Shutterstock