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US Congress Requests Comprehensive Cryptocurrency Guidance From IRS

By

Daniel

Putney

WriterETHNews.com

The current guidelines, begun in 2014, are still "preliminary."

The Committee on Ways and Means of the US House of Representatives recently sent a letter to the Internal Revenue Service (IRS) urging the tax collection agency to update its cryptocurrency guidelines. Addressed to the IRS' acting commissioner, David Kautter, the letter notes that the agency's enforcement activities have expanded but that it has not updated its guidance to taxpayers.

The committee submitted a similar request to the bureau on May 17, 2017, but in the IRS commissioner's response, he maintained that the information provided in Notice 2014-21, a 2014 document providing some cryptocurrency guidelines, was "preliminary." From that interaction, the committee gathered that the agency intended to provide further guidance relating to cryptocurrencies, resulting in the committee's most recent letter.

The authors, congressional members Kevin Brady, Lynn Jenkins, David Schweikert, Darin LaHood, and Brad Wenstrup, noted that for some time, "the IRS has struggled with how to treat virtual currencies for tax purposes." Although the agency began working on the issue in March 2014, it has not issued any final guidance. In September 2016, for instance, the treasury inspector general for tax administration said that "the IRS had yet to develop a comprehensive virtual currency tax strategy."

The authors went on to say that they appreciated the IRS' enforcement actions, citing the agency's new compliance campaigns and its John Doe summons to obtain virtual currency records between 2013 and 2015. The criminal investigation arm of the IRS also announced the formation of an international tax enforcement group, the Joint Chiefs of Global Tax Enforcement, in early July to combat international and transnational tax crimes.

However, the committee is concerned that the bureau is enforcing guidelines that do "not adequately advise taxpayers of their tax obligations when using virtual currencies." This lack of adequate guidance, according to the authors, "severely hinders taxpayers' ability" to adhere to such obligations.

Further, the authors maintain that the IRS has had enough time – four years – to work through any issues to provide taxpayers with "more robust guidance."

That said, the agency has experienced several years' worth of budget cuts, leading to fewer audits and, therefore, less potential tax revenue. It is possible that the IRS does not have the bandwidth, in terms of both finances and labor, to comprehensively tackle the question of cryptocurrency guidance.

In signing off, the authors provided a deadline of October 17 for the IRS to submit additional information to the committee. For clarity's sake, they instructed Acting Commissioner Kautter to "answer the questions" that the committee has "on a question by question basis, indicating which questions [he is] answering."

Daniel Putney

Daniel Putney is a full-time writer for ETHNews. He received his bachelor's degree in English writing from the University of Nevada, Reno, where he also studied journalism and queer theory. In his free time, he writes poetry, plays the piano, and fangirls over fictional characters. He lives with his partner, three dogs, and two cats in the middle of nowhere, Nevada.

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