Lawmakers in the United States have reached out to the Internal Revenue Service (IRS), the nation’s tax collection agency, calling for clearer taxation rules concerning cryptocurrency.
Failure to inform
The letter has been signed by Representatives David Schweikert, Darin LaHood, Lynn Jenkins, Brad Wenstrup, and Kevin Brady, who is the chairman of the committee on Ways and Means.
The open letter, dated 19 September, recalls a letter sent to the IRS over a year ago with regards to enforcement actions taken by the IRS against cryptocurrency holders. With some tone of complaint, the letter says that after this time, the IRS has expanded enforcement “without issuing any further guidance for taxpayers”.
It said, “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 letter also makes note of the March 2018 notice that the IRS released as a reminder to taxpayers who have not declared their cryptocurrency transactions can be held liable for penalties and interest.
It adds, “The IRS has had four years to work through these issues since its preliminary guidance was issued, providing more than adequate time for the IRS to thoughtfully consider what additional information is needed.”
Earlier this year in April, the IRS released a notice on the treatment of cryptocurrencies for taxation purposes although, at this time, Arizona was the state which was attempting to pass crypto tax bills.
The letter argues that the IRS has failed to provide adequate guidance to taxpayers, significantly hindering their capacity to comply with crypto tax obligations.
This motion has received backing from the community, cryptocurrency advocacy group Coin Center published a blog post saying that they were “glad to see Congress take action”. It wrote, “Currently, a user needs to calculate capital gains on every stick of gum they buy with cryptocurrency. That doesn’t make sense. The Cryptocurrency Tax Fairness Act, introduced last year, would address this issue.”
The lawmakers’ letter closes by “strongly urging” the IRS to introduce robust clarifications on crypto tax obligations. It also asks for a written response from the IRS which provides an outline on efforts to be made by the IRS, a timeline for release and what the IRS “intends to cover in this guidance”.
Furthermore, it states, “To assist the Committee in better understanding this issue, we will be asking the Government Accountability Office to undertake an audit on this matter.”
In the United Kingdom, similar efforts to create clearer cryptocurrency regulations have been made by the Treasury Committee, calling for the “Wild West” market to be regulated.
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