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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds.
He owns BTC, ETH, UNI, DOT, MATIC, and AVAX
AUSTIN, Texas — The US Internal Revenue Service hopes to issue crypto tax guidance ready “in 12-ish months,” Julie Foerster said from the stage at Consensus 2023 on Friday.
The digital assets project director also said the IRS is planning to change how it looks at cryptocurrency and wants to work more with the industry.
Foerster, who stressed her views are her own and not necessarily those of the IRS, said her five-person team was with her at Consensus, presumably moving through the convention center, talking to people about taxes and what the US agency can do better.
“We are engaging with you all so we get it right and build a plan,” she said. She later added the IRS “needs to look at the skills of the people we have today and those we will bring on in the future. … We need to have the right tools and the right people.”
As it currently stands, the IRS considers cryptocurrencies to be convertible virtual assets that can be used as payment for goods and services, digitally traded between users and exchanged for other currencies.
While not considered to be fiat currency, for federal tax purposes cryptocurrencies are considered property, and as such users are required to report their digital assets activity on their tax returns.
Foerster highlighted that the landscape for digital assets is an evolving one, and emphasized a need to increase communications between the agency and the crypto community. In particular she urged people to comment on a March proposal to tax non-fungible tokens (NFTs) like other collectibles. The comment period closes June 9.
Foerster added the US tax agency is also talking to some of its foreign counterparts – she did not name them – about crypto taxation best practices.
“I will say that we have had countries come in and want to talk to us and in our large business and international division. Events like this and other events that we’ve attended also are providing us an insight or perspective internationally,” she said.
In the end, however, she said the agency has to find “other ways to get our message across to assist in voluntary compliance.”
Edited by Margo Beller and Jeanhee Kim.
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Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds.
He owns BTC, ETH, UNI, DOT, MATIC, and AVAX
Learn more about Consensus 2023, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.
Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds.
He owns BTC, ETH, UNI, DOT, MATIC, and AVAX
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Recently, an official from the IRS (Internal Revenue Service) in the United States revealed that the government could offer guidance on digital currencies in the next 12 months or so.
The US is one of the few countries yet to have issued comprehensive guidance on how cryptocurrency and digital asset holders should pay tax on their gains, leaving individuals and businesses in the dark.
At a meeting of Bloomberg Tax’s “Virtual Tax and Accounting Summit”, John Lanning, the head of pass throughs and special industries at the IRS, gave some hope that clarity could soon be available.
As such, he noted that the agency’s cryptocurrencies and virtual currency guidance is “not far enough ahead” and that “it’s definitely going to be in the works in the next 12-ish months.”
However, Lanning also noted that this timeline could change depending on the complexity of the work which is currently taking place, which primarily revolves around the tax treatment of stablecoins, namely Facebook’s proposed Diem (formerly known as Libra).
Lanning reassured those listening to the virtual meeting, noting that the IRS doesn’t intend to provide overly complex rules, adding that: “We don’t want to over-regulate it, we don’t want to have too high of hurdles.”
Government guidance on how to go about paying taxes related to cryptocurrency and digital asset gains is long overdue, and the imminent announcement will bring some much-needed clarity on the issue.
Nevertheless, individuals and businesses operating in the space should still be wary when it comes to their tax obligations and should seek appropriate advice from professionals on the matter.
