Congress members ask IRS to clarify its confusing tax policy regarding cryptocurrencies
- The IRS’s taxation code for airdrops and forks has been highlighted in the appeal, asking for further clarification.
- The members appealed to the IRS to offer safety from tax penalties for those caught off guard.
Eight Congress members have requested the Internal Revenue Service (IRS) to clarify its stance on crypto taxation. A letter sent to the agency addressed the issues facing the taxation of crypto and the lack of clarity in the present policy. Misunderstanding of how digital currency works seems to be the main issue at hand. This is highlighted in the IRS taxation code for airdrops and forks. These both create taxable events in the existing plan.
The existing code requires taxpayers to pay taxes on funds that are received through airdrops or forks. Both these events can grant new coins or tokens to present holders of various digital assets. This is seen as a taxable event by the IRS. One of the main issues right now is that a taxpayer may be expected to pay taxes on funds that they’re not aware they own. Forks and airdrops can move funds into investors’ accounts without them knowing. This way, they are forced to pay taxes on funds they have no control over. The letter requests the IRS to offer safety and leniency to investors who are caught off-guard by the regulations.
Author
Rajarshi Mitra
Independent Analyst
Rajarshi entered the blockchain space in 2016. He is a blockchain researcher who has worked for Blockgeeks and has done research work for several ICOs. He gets regularly invited to give talks on the blockchain technology and cryptocurrencies.
