The IRS published guidance around taxing cryptocurrency holdings in October, addressing cost basis and forks, two long-standing questions the crypto community has had.
Several of the congressmen who signed the letter, including Emmer, Soto, Foster and Schweikert, are members of the Congressional Blockchain Caucus, a formal group of lawmakers who advocate for blockchain technology and cryptocurrencies. Friday’s letter was first shared by industry think tank Coin Center.
The U.S. taxman’s most recent crypto guidance is sowing confusion, according to a letter from eight congressmen published Friday.
According to a letter penned by Representatives Tom Emmer (R-Minn.), Bill Foster (D-Ill.), David Schweikert (R-Ariz.), Darren Soto (D-Fla.), Lance Gooden (R-Texas), French Hill (R-Ark.), Matt Gaetz (R-Fla.) and Warren Davidson (R-Ohio), the Internal Revenue Service’s (IRS) latest guidance clarifies some aspects of the tax treatment for cryptocurrencies, but leaves much to be desired.
However, the new guidance raised a number of new questions, particularly around airdrops and unwanted forks. There was also no de minimis exemption for small purchases, such as a cup of coffee.
Friday’s letter pointed to these unwanted forks and airdrops as one major area of concern, noting that the current guidance appears to suggest individuals are liable for taxes on any cryptocurrencies they gain as a result of a hard fork or airdrop, regardless of whether or not they’re aware they received these cryptocurrencies.
«This creates potentially unwarranted tax liability and administrative burdens for users of these important new technologies and would create inequitable results,» the letter said. «We do not expect this is the intended effect of the guidance, and we urge the IRS to clarify the matter.»
The letter specifically asks:
The letter also said the congressmen are «concerned that the form of the guidance appears to indicate that this is ‘established’ law.»
The congressmen wrote that they hope the IRS continues to treat crypto as a «new and developing» area, and hope the questions listed are answered «as soon as possible.»
Friday’s letter is only the latest in a series sent by lawmakers to the IRS asking the agency to clarify how it is approaching the space.
US Financial Crimes Watchdog Preparing ‘Significant’ Crypto Rules, Warns Treasury Secretary Mnuchin
The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) is preparing to unveil new regulations around cryptocurrencies, Treasury Secretary Steven Mnuchin said Wednesday.
Speaking during a hearing before the Senate Finance Committee, Mnuchin said FinCEN, the nation’s financial crimes watchdog, is preparing to roll out some «significant new requirements» around cryptocurrencies, though he did not provide any further detail.
Mnuchin’s explanation came in response to Senator Maggie Hassan (D-N.H.), who asked, «How will the Treasury’s proposed budget increase in monitoring suspicious cryptocurrency transactions and prosecuting terrorists and other criminal organizations financing illicit activities with cryptocurrency?»
FinCEN and the Treasury Department more broadly are «spending a lot of time on this,» Mnuchin said, and was working with some of the U.S.’s regulators on the issue. He did not name the specific regulators but the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury Department’s Office of Foreign Asset Control have all been active in the crypto space.
«We want to make sure that technology moves forward but, on the other hand, we want to make sure that cryptocurrencies aren’t used for the equivalent of old Swiss secret number bank accounts,» he said.
However, Treasury does share the senator’s concerns about illicit use, and «you’ll be seeing a lot of work coming out very quickly,» Mnuchin said.
A spokesperson for FinCEN did not immediately return a request for comment.
FinCEN and its director, Kenneth Blanco, have been warning businesses in the crypto space for months that in their view, existing regulations cover most forms of crypto transactions, particularly anti-money laundering rules.
FinCEN joined its fellow financial regulators in signing a joint statement last autumn, noting that banking laws still apply to this nascent asset class.