December 23, 2019 Ali Raza 0 Last Updated on December 23, 2019
The Internal Revenue Service (IRS) has received a letter from eight lawmakers in the hopes that the firm provides clarity over many questions regarding the latest update to the IRS’s crypto guidance.A key focus for answers the Lawmakers want is the addition of unwarranted tax liabilities that crypto users have, should they unwillingly receive coins via fork or airdrop.A Tad Late On The Reply
The letter, dated the 20th of December, is directly addressed to Charles P.Rettig, the commissioner of the IRS.
Within this letter was the signatures of congressmen like David Schweikert, Tom Emmer, Matt Gaetz, Lance Gooden, Darrent Soto, Bill Foster, Warren Davidson, and French Hill.
One of the first things that the letter addressed is the fact that the guidance seemed unjust due to it coming almost two years after the hard fork between Bitcoin and Bitcoin Cash .It comes after three years of the Ethereum fork , as well.
Lack of Clear, Transparent Hypotheticals
The various lawmakers referred to the letter they sent back in April, where the group urged the commissioner to issue tax guidance for various crypto users.The IRS only published its latest guidelines back in October, something that was built to supplement the previous issuance of 2014.The problems with this new guideline were rather quickly identified through the crypto community.
The congressmen quickly addressed one of the critical problems with the guidelines: The tax issues in regards to airdrops and hard forks.The lawmakers consider the hypothetical scenarios that the IRS had presented as something not remotely similar to real-life events in terms of hard forks and airdrops.Thus, the examples to prove the idea of what the IRS means with its guidelines, do not mirror any sort of real equivalent.
The letter explains that it becomes difficult to follow and interpret the policies of the IRS if it doesn’t give accurate, transparent, and easily understood hypotheticals and show it to the taxpayers.Taxation For Unsolicited Airdrops
Another critical issue is how the IRS handled the liability of coins that were given via hard fork and airdrops.
The letter explained that the IRS treats these unsolicited acquisitions as something the taxpayer both knew beforehand and accepted.Thus, a taxpayer that is either unaware or refused to accept the airdrop of crypto is still liable to taxation from it.
It seems that, even now, the world is still unsure of how to handle the crypto industry, quite yet.While it will be an eventual mainstay within the world’s financial sectors, it seems that there are many facets still not understood by major governing bodies.Remember, all trading carries risk.
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About Ali Raza A journalist, with experience in web journalism and marketing.Ali holds a master’s degree in finance and enjoys writing about cryptocurrencies and fintech.Ali’s work has been published on a number of cryptocurrency publications..
