Polis, Schweikert request tax guidance for virtual currencies
Blockchain Caucus co-chairs send letter to IRS urging tax clarity
WASHINGTON: Rep. Jared Polis, D-Colo., and Rep. David Schweikert, R-Ariz., co-chairs of the Blockchain Caucus sent a letter to the Internal Revenue Service (IRS) requesting additional guidance on the tax consequences and basic tax reporting requirements for transactions using virtual currencies such as Bitcoin and Ethereum.
“Over the past few years, it’s become clear that digital currencies are increasing in popularity and we need to ensure that the IRS clarifies how to properly tax these forms of transactions,” Polis said. “I look forward to hearing from Commissioner Koskinen and receiving clear-cut guidance for how digital currency users report their taxable income.”
"As this technology develops regulatory certainty is needed. We look forward to engagement as we build a framework for blockchain and virtual currency technology,” Schweikert said.
In 2014, the IRS classified virtual currency as property and explained how a taxpayer may have income as a result of different types of virtual currency transactions. While the IRS has been engaged with virtual currencies and tax compliance since 2007, they have failed to provide clarification about how consumers should comply with IRS tax guidance.
“Coin Center applauds Rep. Polis and Rep. Schweikert for taking leadership on this issue,” Jerry Brito, Executive Director of Coin Center said. “If taxpayers and digital currency exchanges don't have clear guidance and easy ways to report taxes owed, innovation on this transformative technology will suffer. We look forward to continuing to work with Mr. Polis and Mr. Schweikert on these and other questions related to taxation of digital currencies.”
Since its introduction as an alternate payment form in 2008, virtual currencies have continued to grow in popularity amongst consumers. The expansion of digital currencies has created a multi-billion dollar market allowing for purchase, trade, and payment across the globe. As of June 2, 2017 the total value of the Bitcoin supply and circulation is $41 billion.