8 Members Of US Congress Send Letter To IRS Urging Agency To Provide Clarity On Crypto Tax Law
8 Members Of US Congress Send Letter To IRS Urging Agency To Provide Clarity On Crypto Tax Law
December 22, 2019
8 Members Of US Congress Send Letter To IRS Urging Agency To Provide Clarity On Crypto Tax Law
8 Members Of US Congress Send Letter To IRS Urging Agency To Provide Clarity On Crypto Tax Law
December 22, 2019

Eight members of the United States (US) Congress sent a letter to the Internal Revenue Service (IRS), urging the agency to provide additional clarity on cryptocurrency tax laws. 

On December 20, a letter has been signed by eight US Congress members, stated:

“We wrote in April of this year urging the issuance of guidance for taxpayers who use cryptocurrencies and we are pleased to see that you have issued guidance and addressed many questions we posed. We are, however, concerned that this recent guidance creates many new questions related to the topics it seeks to address, namely forks and airdrops.”

However, the IRS originally came out with an official ruling on cryptocurrency tax expectations on October 9, 2019. The ruling noted several points of taxation, including a tax on holders in the event of a cryptocurrency fork or airdrop, regardless of the holder’s knowledge of such an airdrop, or price action following the airdrop. 

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It has been analyzed that the signed letter detailed that the original October 9 IRS ruling used hypothetical examples for reference that are not actually applicable or plausible, and are therefore unclear for tax-paying citizens.  

Likewise, the letter specified “dominion and control” as relating to forks and airdrops in the October 9 IRS ruling, requesting transparency on the matter. Due to a lack of clarity surrounding each specific point that triggers a taxable event, the receptor of a fork or airdrop could face taxation without any knowledge of such an event.  

The letter also points out a lack of guidance within the current IRS ruling regarding various crypto-based finance, including futures trading and interest earned from digital asset deposits, as well as all crypto-based income. 

Additionally, the letter asked for decisive action on tax reporting and withholding aspects, such as 1099 form usage, as well as on the topic of retroactive enforcement.

Thus, in the letter’s conclusion, the Congress members wrote:

“[W]e are concerned that the form of the guidance appears to indicate that this is ‘established’ law. We hope that the IRS recognizes this area as new and developing and will allow for reasonable interpretations in advance of the issuance of the most recent guidance.”

Source: cointelegraph.com


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with an experience of 1 year. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space, as she loves writing about blockchain and other blockchain-related articles. Currently, she is working on blockchain-based news, reviews, featured articles, and guides.