Crypto tax regulation: 8 Congress reps send letter to IRS urging crypto tax clarity

Eight members of US Congress have sent a letter to the Internal Revenue Service requesting the agency to clarify crypto tax laws. The letter requests the IRS to clarify tax laws surrounding crypto events such as airdrops and forks. 

IRS’ crypto tax regulation

The congressmen appreciated that the agency responded to their letter that was sent back in April 2019. However, they stated that the guidelines issued by IRS created many new questions about taxation regarding crypto events such as forks and airdrops. The letter dated December 20 was signed by eight members of Congress who have not issued any other statements regarding the topic.

Earlier on October 9, the agency had released its official policy regarding crypto taxation. The guideline included how to address crypto taxation as well as containing an outline regarding tax on holders during crypto forks and airdrop. The tax would be applied to their holdings regardless of whether they had knowledge of this event or not.

The recent letter by Congress members stated that the ruling by IRS only included hypothetical examples as a source of reference, These examples were unclear and needed further clarification before they could be used by tax-payers. The letter requested the IRS to make things transparent regarding airdrops and forks as the previous ruling would cause people to become liable to taxes despite having no knowledge regarding the event.

The letter also observed that the IRS did not properly address blockchain-based finance including futures trading, crypto-based income and interest earned from asset deposits. The letter requested IRS for decisive action on tax reporting and withholding aspects such as 1099 form usage.