A group of representatives across both parties in the United States of America, sent a letter to the Internal Revenue Service (IRS) on April 11, asking them to update their half a decade old guidelines on cryptocurrency-related guidelines.
The group, which is currently led by, Representative Tom Emmer from Minnesota, wants a written reply from the IRS, latest by May 15. As per a report published by DailyHodl, the lawmakers are requesting new guidance, given that the government agency’s official document on how tax principles apply to crypto trades and transactions has not included a single frequently asked question since 2014.
The letter, while addressing the problem, that the guidelines have not been updated and have been shrouded in ambiguity, said, “While we acknowledge and appreciate the guidance your agency released in 2014, there is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies. In particular, we feel there is urgent need for guidance on the following issues:
1. Acceptable methods for calculating the cost basis of virtual currencies. Which specific methods does the IRS consider to constitute “a reasonable manner that is consistently applied,” as required by Notice 2014-21?
2. Acceptable methods of cost basis assignment and lot relief for virtual currencies. Do taxpayers need to use specific identification whenever they spend or exchange virtual currency, or are other methods, such as first-in-first-out or average cost basis, acceptable as well?
3. The tax treatment of forks for taxpayers that use virtual currencies, such as the 2017 hard fork of the Bitcoin blockchain.
There are many other open questions about the federal taxation of virtual currencies, but we feel that there is particular urgency in resolving the ambiguity around basic questions of how taxpayers should calculate and track the basis of their virtual currency holdings. It is not reasonable to expect taxpayers to satisfactorily answer these complex questions while the IRS remains silent.”
Earlier, this month, US representatives Warren Davidson and Darren Soto, who have been at the forefront of bringing about blockchain and cryptocurrency to the mainstream had introduced two Bills on the same in the Congress.
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