A group of U.S. legislators has asked the Internal Revenue Service (IRS) to provide updated guidelines on how taxpayers should report profits associated with investing in bitcoin and other cryptocurrency assets.
In a letter dated Sept. 19 and published on the House Ways and Means Committee website, five representatives — Kevin Brady (R-TX), David Schweikert (R-AZ), Lynn Johnson (R-KS), Darin LaHood (R-IL), and Brad Wenstrup (R-OH) — “strongly urged” the IRSto issue comprehensive, updated guidance on federal tax obligations associated with disposing cryptocurrency assets, either through trading or other means.
The group of Republican lawmakers had sent the IRS a letter last May expressing concern over the agency’s decision to ramp up enforcement of cryptocurrency-related violations without also adopting a “comprehensive virtual currency strategy” to help taxpayers more successfully navigate the murky regulatory code.
In this week’s letter, 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 further guidance for taxpayers. We therefore write 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 virtual currencies.”
The legislators repeatedly contrasted the agency’s increasing enforcement of cryptocurrency tax evasion, which included taking trading platform Coinbase to court to obtain information on customer transactions, with its implicit refusal to provide either updated guidance or safe harbor for taxpayers who made a good-faith effort to report their cryptocurrency-related gains.
“Despite the issuance of only preliminary guidance on this issue, the IRS has made enforcement of this guidance a priority, undertaking robust enforcement actions on a number of fronts,” the lawmakers wrote. “At the same time, the IRS also announced that it would not be providing leniency for taxpayers by allowing for a voluntary disclosure program to address tax non-compliance related to virtual currencies.”
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