Today’s letter, published by House Ways and Means Committee Chairman Kevin Brady, calls on the agency to “expeditiously issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies.” It is a follow-up to a letter published in 2017.
These letters echo Coin Center’s calls for greater clarity and guidance around the tax treatment of cryptocurrencies. Right now, American cryptocurrency users who want to pay their taxes simply don’t know how to do so properly. This gray area is not only frustrating, but can also create serious liabilities for well-meaning citizens.
The 2017 letter goes on to ask for more information about the rationale behind the IRS’s 2017 John Doe summons for Coinbase user data, which we believe is an overly broad fishing expedition.
We were also pleased to see them ask if the agency will consider a de minimis exemption for small transactional use of cryptocurrencies, which we called for in April of last year. Currently, a user needs to calculate capital gains on every stick of gum they buy with cryptocurrency. That doesn’t make sense. The Cryptocurrency Tax Fairness Act, introduced last year, would address this issue.
We are glad to see Congress take action–there are clearly many open questions surrounding taxation of cryptocurrencies. It’s promising to see members of Congress step up to call for a more welcoming environment for these new technologies.