In a letter dated 16 May 2019, IRS Commissioner Charles P. Rettig responded to a request from Rep. Tom Emmer by claiming the IRS will soon publish clarificatory tax guidance for virtual currencies. The letter acknowledged continued development since the last time tax guidance was issued by the IRS, back in 2014.
New Cryptocurrency Tax Guidance from the IRS Coming Soon
On April 11th 2019, Rep. Tom Emmer sent a letter to IRS Commissioner Rettig asking for new tax guidance concerning digital assets.
The letter explained that despite tax guidance issued by the IRS back in 2014, “there is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies”.
It concluded by requesting a response by May 15th 2019, and was signed by Emmer and 20 additional members of Congress.
Commissioner Rettig has now responded to Rep. Emmer.
In a formal letter, Rettig acknowledged that since the last digital asset guidance was issued, digital assets have evolved.
“As noted in your letter, we issued Notice 2014-21, which stated that virtual currency is treated as property and existing tax principles applicable to property transactions apply to virtual currency transactions. Since that time, virtual currency as a medium of exchange and investment has continued to develop.”
Rettig continued by describing the scope of future guidance, which is set to be published soon:
“I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance. Specifically, your letter mentions (1) acceptable methods for calculating cost basis; (2) acceptable methods of cost basis assignment; and (3) tax treatment of forks. We have been considering these issues and intend to publish guidance addressing these and other issues soon.”
How Digital Assets Are Seeing More Regulation Than Ever Before
The IRS is just one of several governmental organizations which regulate digital assets in the United States.
The Securities and Exchange Commission (SEC) is also playing a crucial role in the future of digital assets.
SEC Chairman Jay Clayton has publicly stated how nearly every Initial Coin Offering (ICO) he has seen, constitutes a securities offering.
Recent SEC guidance corroborates his message.
The result has been an ongoing transition to security tokens. By incorporating the SEC’s existing regulatory requirements, Security Token Offerings (STOs) entail the much desired compliance that ICOs lack.
What do you think of the increased regulation of digital assets? What will the new tax guidance issued by the IRS look like? We want to know what you think in the comments section below.
Image courtesy of the IRS.