The US tax authorities may clarify cryptocurrency taxation issues

The U.S. Internal Revenue Service (IRS) wants to update the methods used to calculate the federal taxes related to cryptocurrency revenues. The new approach should improve clarity for taxpayers.

The authority follows the steps of Minnesota Representative Tom Emmer who attempted to pass the bill that would change the way hard fork and the resultant coins are taxed. He did not succeed with his proposal in September 2018 but promised to rework it and introduce a new version in May 2019.

On April 11, 2019, Emmer jointly with Blockchain Caucus sent an open letter to IRS Commissioner Charles Rettig where they expressed their concerns regarding the taxation of so-called fork coins under the existing tax code. They also drew attention to the general issues of cryptocurrency taxation. 

On May 16, 2019, Rettig forwarded Congressman Emmer a request for more details about cryptocurrency taxes.

“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,” he wrote. 

The IRS Commissioner also invited Emmer and the Blockchain Caucus members to contact him in case they have any questions or concerns about  IRS’ future efforts.