2020-2-16 15:30 |
The IRS’ guidelines on crypto tax reporting remain unclear, and may not be binding, per the analysis of the Government Accountability Office (GAO). Crypto Tax Reporting Guidelines Change Without Warning Reporting on ownership and gains from crypto assets remains unclear, as the IRS has not codified all of its opinions into Internal Revenue Bulletins. The guidelines on taxing digital assets from 2019, however, is not an official document, opening up problems of interpretation, reported Forbes. What is more, the guidelines remained uncertain until the last on the exact nature of digital assets. Only in the past week, the IRS once again edited its crypto tax guidelines to remove mentions of in-game tokens such as Robux and V-bucks. The IRS has not taken care to signify that its FAQ is not authoritative and is subject to change without warning, pointed out the GAO. The removal of in-game assets is one example of how the IRS remains uncertain on which assets should be taxed, and when. The GAO itself warns that its position is not tax advice, but only opinion and analysis. However, the GAO stands behind its statement on unclear guidances on airdrops and hard forks. The IRS has also made purely technical mistakes in understanding hard forks and has described taxable events, which may put owners in breach without intention. Tax Forms and Bulletins Show Official IRS Position Taxable events hinge on the currently available forms and the possibility to describe transactions and exchanges from cryptocurrency to fiat. Some crypto exchanges in the US behave as voluntary reporters, filling in forms 1099-K and 1099-MISC on behalf of their clients. But other market operators do not report crypto trades or withdrawals. The IRS has not created unified reporting rules, and various actors are interpreting the crypto tax law in different ways, creating discrepancies. The IRS has opened a program on clarifying reporting requirements and is working on ensuring the right forms get filled, stated the GAO. For now, non-compliant crypto traders and owners may be confused by the vague and conflicting rules. The IRS has also not issued any guidelines on assets held on international platforms. Those exchanges do not have the duty to report to the IRS. Foreign crypto exchanges may lack transparency, but there is also no agreement on the duties of traders to report. The IRS and FinCen are yet to issue guidelines on owning assets held in offshore storage. In the coming months, there may be more clarity on whether foreign-held assets fall under the requirements of the Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR). For now, US traders may not be exposed to such issues, as in the past year, most international crypto exchanges started excluding US-based crypto traders due to compliance concerns. What do you think about the 2019 crypto guidelines FAQ? Share your thoughts in the comments section below!
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