The Internal Revenue Service (IRS) plans to take up advice offered recently by U.S. Rep. Tom Emmer (R-MN) and several colleagues to provide additional guidance for American taxpayers regarding the tax consequences and basic reporting requirements for virtual currency transactions.
“I am glad to hear of the IRS’ plans to issue guidance on this important issue,” said Rep. Emmer, a co-chairman on the Congressional Blockchain Caucus. “I look forward to seeing their forthcoming proposal and working together to serve the American taxpayers.”
IRS Commissioner Charles Rettig sent a May 16 letter to Rep. Emmer confirming the agency’s intent to publish further guidance.
“I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance,” wrote Rettig, who said the IRS would address acceptable methods for calculating cost basis; acceptable methods of cost basis assignment; and the tax treatment of forks.
“Taxpayers deserve clarity on several basic questions regarding federal taxation of these emerging exchanges of value,” said Rep. Emmer after receiving the letter.
Rep. Emmer and the other lawmakers wrote in their April 11 letter sent to Rettig that the IRS hadn’t issued related guidance since 2014 when it published Notice 2014-21, which stated that digital assets could be treated like property for tax purposes.
“Since that time, virtual currency as a medium of exchange and investment has continued to develop,” wrote Rettig, acknowledging the lawmakers’ point. “We have received numerous comments in response to the Notice and have been working with internal and external stakeholders to identify areas where needed and helpful additional guidance can be provided.”
Rep. Emmer, his fellow caucus co-chairs, and several other members also pointed out that more than a decade had passed since the IRS National Taxpayer Advocate had identified the tax treatment of virtual property and currency transactions as one of U.S. taxpayers’ “most serious problems.”
The IRS commissioner agreed with Rep. Emmer and wrote, “We have been considering these issues and intend to publish guidance addressing these and other issues soon.”