US Reps Urge IRS to Clarify Reporting of Crypto Taxes Ahead of April 15 Deadline
U.S. Congressmen sent a bipartisan letter to the IRS asking to clarify the basics of crypto tax reporting.
21 different representatives sent a bipartisan letter to the U.S. tax authority requesting guidance on how to report virtual currency taxes. The action took place before the filing deadline for federal income tax returns on April 15, 2019.
In the letter, the representatives mentioned the IRS’s previous efforts to establish a tax treatment for virtual assets. The letter noted that the IRS’ approach to virtual property and currency transactions was one of the most serious problems encountered by taxpayers back in 2008.
The lawmakers also noted that the IRS released guidance in 2014, but the Inspector General for Tax Administration found it lacking and recommended better guidance for how various virtual currencies are treated within the tax regime.
The letter urged the IRS to provide guidance on tax consequences and basic reporting requirements for taxpayers that use virtual currencies, claiming that there is still “substantial ambiguity on a number of important questions about the federal taxation” of the emerging type of asset.
Specifically, the letter asks the IRS to specify acceptable methods for calculating the virtual currencies’ cost basis, cost basis assignment and lot relief, as well as tax treatment of crypto hard forks, citing Bitcoin’s (BTC) fork Bitcoin Cash (BCH) that took place in August 2017.
The letter concluded that “it is not reasonable to expect taxpayers to satisfactorily answer these complex questions while the IRS remains silent.”
Recently, American personal finance firm Credit Karma revealed that the amount of its filers who reported short-term crypto losses surged fivefold in the first month of 2019 over the same period in 2018. Previously, Credit Karma released a survey showing that only 53 percent of Americans planned to report their gains and losses for taxes from crypto, while 35 percent of respondents claimed that they lost money by trading crypto and will not report on their tax returns.