The ‘letter‘ from the IRS comes in response to an ‘invitation‘ from 21 representatives in Congress, along with Rep. Tom Emmer, to offer clarity on crypto related taxes on cryptocurrency holdings. Within the letter to the tax authority, the representatives then claimed that there’s still “substantial ambiguity on several of vital questions about the federal taxation” of the emerging type of asset.
Within the new letter addressed to Emmer, IRS Commissioner ‘Charles Rettig’ expressed that the agency “made it a priority” to issue the required more clear guidelines. The instructions would specifically cover issues like acceptable strategies for calculation cost basis, cost basis assignment; as well as tax treatment of forks.
Rettig conjointly ‘outlined‘ within the letter that virtual currency is treated as a property and existing tax principles applicable to property transactions apply to crypto transactions alike. The commissioner additionally revealed that the IRS has been working with the leading industry players to outline areas wherever guidance is required.
Emmer antecedently introduced three bills to support ‘blockchain‘ technology and crypto assets. The bills would prompt the federal government a “simple legal ecosystem,” and prohibit fines against people who report forked digital assets till the IRS presents formal guidelines on the suitable means of reporting. According to Emmer, “taxpayers can solely comply with the law once the laws are more clear.”
Earlier in January, Emmer and Congressman ‘Darren Soto’ submitted a ‘bill‘ entitled to “offer a secure harbor from licensing and registration for certain non-controlling blockchain developers and suppliers of blockchain services.” The bill would exempt firms offering non-custodial ‘cryptocurrency‘ services from state money transmission ‘laws‘.