Cryptocurrencies need to be taxed; US representatives to the IRS

On Thursday it was revealed that a group of United States bureaucrats led by US representative Kevin Brady, had sent an open letter to the Internal Revenue Services [IRS], asking the decision makers to start taxing cryptocurrencies. The main crux of the letter was the fact that the IRS has been indecisive in categorizing cryptocurrencies, even citing early reports from 2014 that talked about working towards taxation of the digital assets.

The letter also states that the cryptocurrency laws have to be made more transparent and should cater to the layman investor. Calling on regulation tactics and delays in decisions, the authors of the letter have assigned a deadline of 17th October 2018 for the IRS to respond to the claims in the document.

The letter stated:

“We, therefore, write again today to strongly urge the IRS to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”

The letter also talks about September 2016, when the Treasury Inspector General for Tax Administration reported that the IRS was yet to develop a comprehensive virtual currency tax strategy. The bureaucrats have also stated in the letter that the IRS has to provide a written list of policies that will govern the working of cryptocurrency as a taxable commodity.

Solutions and penalties were also discussed in the letter, taking the example of the March 2018 decision by the IRS. The IRS had stated that “those who do not properly report the income tax consequences of virtual currency transactions can be audited for those transactions and held liable for penalties and interest.”

The report went so far as to suggest that after the continuous violation of tax laws, the cryptocurrency holder can even face jail time depending on the severity of the infringement.

Governmental bodies in the United States have been clamping down on shady activities that occur in the realm of cryptocurrencies, the latest report on digital assets by the New York Attorney General standing out as a prime example. The NY AG did not hold back as it called out famous cryptocurrency exchanges like Coinbase and Kraken on skimming the law, proving that cryptocurrency is no longer a niche sector.

The Securities and Exchanges Commission [SEC] has also been diligent in its work towards regulating cryptocurrencies with Hester Pierce, the SEC Commissioner tweeting:

“Regulators need to hop out of their helicopters and onto the free range.”

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