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Demands from the “US Congress” to provide guidance on the tax system on cryptocurrencies

Demands from the “US Congress” to provide guidance on the tax system on cryptocurrencies

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Answer Demands from the “US Congress” to provide guidance on the tax system on cryptocurrencies

A number of members of the US House of Representatives (Congress), specifically from the Internal Revenue Service (IRS), have called for updated guidance on how to report to taxpayers the profits associated with investing in Bitcoin and other digital currencies.

Republicans criticize the IRS for enforcing the law without clear guidance

In a September 19 letter posted on the website of the House Committee on Ways and Means, five representatives: Kevin Brady, David Schweckert, Lynne Johnson, Darren LaHaud and Brad Winstrup Urging the IRS to issue comprehensive, up-to-date guidance on federal tax obligations associated with crypto-assets, either through trading or other means.

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The group of Republican lawmakers sent a letter to the IRS last May expressing concern about the agency’s decision to strengthen enforcement of abuses related to cryptocurrency exchanges without adopting a “comprehensive digital currency strategy” aimed at helping taxpayers bypass the murky regulatory law more successfully. .

In this week’s message, They criticized the IRS for failing to address their concerns:

“More than a year after our initial letter, the IRS continues to expand its enforcement activities without issuing any additional guidance to taxpayers. We are therefore writing again today to strongly urge the IRS to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using cryptocurrencies.”

Lawmakers have repeatedly contradicted the agency’s increased enforcement of tax evasion on cryptocurrency, which has included summoning trading platform Coinbase to court for information about customer transactions, with its tacit refusal to provide either updated guidance or a safe haven to taxpayers who have made a good-faith effort to report associated gains.

“Despite issuing only the first directive on this issue, the IRS has made enforcement of this directive a priority, establishing robust enforcement actions on a number of fronts,” the lawmakers wrote. “At the same time, the IRS also announced that it will not provide leniency to taxpayers by allowing the voluntary disclosure program to address tax non-compliance associated with cryptocurrencies.”

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Taxes on Bitcoin for the Internal Revenue Service

The current Internal Revenue Service guidance on cryptocurrency dates back to 2014 when bitcoin was trading in a different pattern than its current value and it wasn’t then that most other digital currencies in existence were invented as this initial guidance treated cryptocurrency assets as “property” For reporting purposes, this means that taxpayers are supposed to pay capital gains on any profits made when they spend their cryptocurrency, even when they cash it out via a small transaction like “buying a cup of coffee” at a crypto-accepting restaurant.

The agency has been conspicuously silent, however, in complex situations like the crypto forks, when a mass split leaves investors with cryptocurrencies on multiple networks — cryptocurrencies in many cases they may not want.

In one of the most visible parts of the letter, lawmakers said they were concerned that the IRS had failed to adequately advise taxpayers on their reporting obligations, while ignoring one of the agency’s primary functions as a government organization.

Read:A fraudster handed over to trial in the US after stealing more than $70 million in Bitcoin

They commented on it:

“A key component of the IRS’ duties as the country’s tax custodian is to help taxpayers understand their tax obligations and how they can best meet them. Failure to provide adequate guidance severely hampers taxpayers’ ability to do so. The IRS has had four years to work on these issues since issuing its initial guidance, providing more than enough time for the IRS to carefully consider the additional information required. “

The lawmakers concluded the letter by calling for the IRS to urgently “issue more robust guidance” on cryptocurrencies, and give the agency an October 17 deadline to provide the House Committee on Ways and Means with information about its plans to draft and issue updated guidance. About this as well as setting a time frame for its eventual publication.


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