The IRS Advisory Committee in the US has requested help in dealing with cryptocurrency taxation in a bid to ease its current $25 billion tax liability.
The Internal Revenue Service (IRS) has recently published its findings from a report which appears to highlight the current confusion surrounding how to address taxation on cryptocurrency assets in the United States. The study was carried out by the Information Reporting Program Advisory Committee (IRPAC) after being asked by the IRS to look if possible areas could be found to improve the tax code for the new fiscal year.
The report also covered cryptocurrency taxation as an area which should be examined more closely, recommending that “…the IRS issue further guidance on the information reporting and withholding implications of cryptocurrency transactions,” adding that “…because transactions in virtual currencies can be difficult to trace and have an inherently pseudonymous aspect, some taxpayers may be tempted to hide taxable income from the IRS.”
Taxation on cryptocurrency assets is a topical point, with nations around the world addressing crypto taxation in their own unique ways. Australia and France have halved theirs this year and some countries have not yet legislated for it. Its unsurprising in the light of similar activity in other jurisdictions that the IRS would seek clarification on how best to move ahead.
In Japan, where cryptocurrency is hugely popular, the Government Taxation Investigation Committee (GTIC), which serves as an advisory body to the Prime Minister, began discussions on Wednesday to propose a simplified cryptocurrency tax payment plan, which they say is currently unnecessarily complex in Japan. The South Africa Revenue Service (SARS) is currently on the hunt for crypto tax dodgers. In South Africa, cryptocurrencies fall under the SARS definition of gross income and are therefore taxable as fiat.
Ukraine has taken the most crypto friendly attitude toward taxation, with a bill under scrutiny which suggests that holders of cryptocurrencies would receive a 10-year break from reporting their earning on tax returns, and miners would be able to waive VAT charges on the sales of any mining equipment.
An added problem for the IRS is the ongoing argument as to how to classify cryptocurrencies. Investors also suffer their own burden as each trade is regarded by the IRS as a taxable event which realizes a profit similar to an investment, hence, very few investors reported their crypto assets in 2017.
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