U.S. Members of Congress Urge IRS to Further Clarify Virtual Currency Tax Policy

December 23, 2019

On Friday, a bipartisan group of Members of Congress sent a letter to IRS Commissioner Charles Rettig requesting that the agency further clarify its tax policy as it relates to virtual currencies, hard forks, and air drops. The letter is a follow-up to a letter sent by 21 Members of Congress, led by Congressman Emmer, requesting guidance on how to report virtual currency in tax filings.

The Chamber supports these Members in their efforts to create a predictable legal environment in the United States by requesting that the IRS clarify its guidance related to virtual currencies issued in October. As noted by Congressman Tom Emmer (R-MN), “Taxpayers deserve the certainty of clear rules of the road so that every American can use this transformative technology, and rest assured they are complying with their tax obligations.” We appreciate the work of Rep. Emmer and the Congressional Blockchain Caucus and its leadership in its pursuit of these important goals.

Specifically, the letter states that the guidance, as written, must be updated to accurately capture the issues virtual currency users face. To remedy this, the letter asks the IRS:

• • How it intends to update its hypothetical cases to more accurately reflect scenarios virtual currency users are currently facing;
  • Whether it will clarify the determination of exercising “dominion and control” over forked assets using recognized standards; and
  • That until clear guidance that is prospective in nature is issued, the agency will not use its authority to bring enforcement actions against taxpayers who are making a good-faith effort to comply.

The Chamber, through its Tax Task Force and Digital Assets Accounting Consortium, has coordinated industry stakeholders to engage with relevant policy makers to identifying areas within the tax code and U.S. GAAP that require further education and clarification to promote the development and use of digital assets.