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Congressmen Write To IRS Seeking Clarity On Crypto Tax Rules As Tax Day Nears

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A bipartisan group of members of the US Congress urged the Internal Revenue Service (IRS) to issue guidance on how digital currency transactions and investments should be reported when tax payers file their income tax return.

21 lawmakers, led by Rep. Tom Emmer, sent a letter to IRS Commissioner Charles Rettig with only a few days left for American taxpayers to file their taxes.

The current guidance for taxpayers is to file each and every transaction executed when using a cryptocurrency because each transaction is considered taxable.

IRS treats virtual currency as a commodity or property, and not as real currency, for federal tax purposes, so virtual currencies are also subject to capital gains laws.

Since 2014, no guidance has been issued by IRS on a number of basic reporting questions regarding federal taxation of these emerging exchanges of value.

It has been more than a decade since the IRS National Taxpayer Advocate identified in one of its annual reports that the ambiguous tax treatment of virtual property and currency transactions was one of "the most serious problems encountered by taxpayers."

"There is still substantial ambiguity on a number of important questions about the federal taxation of virtual currencies," says the letter.

While the 2014 guidance failed to address fundamental tax questions, ambiguity around basic questions of how taxpayers should calculate and track the basis of their virtual currency holdings remains.

A recent report from Coin Center says that instead of providing clarity, the IRS has increased enforcement activities against taxpayers who "misreport" their cryptocurrency transactions.

Signatories to the letter include Bill Foster (D-IL), David Schweikert (R-AZ), Darren Soto (D-FL), Patrick McHenry (R-NC), Jim McGovern (D-MA), French Hill (R-AR), Terri Sewell (D-AL), Warren Davidson (R-OH), Stephen Lynch (D-MA), Ted Budd (R-NC), Eric Swalwell (D-CA), Trey Hollingsworth (R-IN), Ed Perlmutter (D-CO), Greg Gianforte (R-MT), Josh Gottheimer (D-NJ), Mark Meadows (R-NC), Lance Gooden (R-TX), Matt Gaetz (R-FL), Ted S. Yoho (R-FL), and Bryan Steil (R-WI).

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