- Five Lawmakers have issued a letter criticizing the IRS for failing to give comprehensive guidelines on cryptocurrency tax
- The laws currently in place are outdated and leave investors confused
- The lawmakers have given the IRS an October 17th deadline to begin drafting new laws
On September 19th, A group of five U.S representatives- Kevin Brady (R-TX), David Schweikert (R-AZ), Lynn Johnson (R-KS), Darin LaHood (R-IL), and Brad Wenstrup (R-OH) have released a formal request for the IRS to create a comprehensive guideline of tax protocol for the disposal of cryptocurrency assets.
This is not their first time petitioning for more well-defined crypto tax laws. Last May, they sent the IRS another letter urging them to become tougher on cryptocurrency tax violations and also to create more defined laws to help out individuals who were unsure of the proper protocol for cryptocurrency.
The representatives also criticized the IRS for not heeding to their last letter and reminded them to take action soon, saying:
“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.”
Not Doing Enough
The representatives acknowledged that the IRS has made some effort so far. They have tried to crack down on cryptocurrency tax violations, most notably taking cryptocurrency exchange CoinBase to court in a bid to get the information of individuals who trade there.
On the other hand, the IRS has not provided a clear guideline for people who do want to declare their cryptocurrency profits and also refuses to give leniency or allow taxpayers voluntarily declare their cryptocurrency assets.
These actions have led to the lawmakers being frustrated with the IRS and feel that they are being unfair to cryptocurrency investors, saying, “the IRS also announced that it would not be providing leniency for taxpayers by allowing for a voluntary disclosure program to address tax non-compliance related to virtual currencies.”
A Ticking Time Bomb
One of the many problems regarding the IRS and Cryptocurrency is that the current laws are very outdated and do not reflect the ever-changing state of cryptocurrency.
A lot of new cryptocurrencies are not even listed in the document, which was created in 2014. The law also requires that individuals pay tax on all cryptocurrency assets disposed of, even though the use of cryptocurrency in a minor situation such as making small purchases count as disposal.
The representatives have given the IRS a deadline of the 17th of October to provide the Ways and Means committee on update information about new laws as well as a publication schedule.