Bitcoin tax guidelines coming soon? Congress again asks IRS for clarification

The leaders of a U.S. congressional blockchain panel are asking the Internal Revenue Service (IRS) to provide more guidance on tax requirements for digital currencies such as Bitcoin.

U.S. Reps. Jared Polis and David Schweikert, co-chairs of the Congressional Blockchain Caucus, sent a letter to the IRS on June 2 asking the tax agency to “issue guidance regarding additional tax liabilities and basic tax reporting requirements for virtual currency transactions.”

The letter also cited a recommendation issued by the Treasury Inspector General for Tax Administration (TIGTA) in November last year, which criticized the IRS for lacking a comprehensive digital currency strategy. At the time, TIGTA said the agency’s shortcomings left investors in the dark and increased potential tax evasion risks.

Polis and Schweikert encouraged the IRS to “consider TIGTA’s recommendations and take steps based on them.” Notably, they urged the IRS to work directly with the digital currency sector in the future.

The co-chairs wrote:

“In addition, we encourage the IRS to work with virtual currency exchanges to better understand their ability to conduct information reporting, including keeping track of realized gains or losses and determining the amounts of virtual currency used in taxable transactions.”

This is the second letter Congress has recently sent to the IRS regarding digital currency. According to Babbitt, at the end of last month, a congressional group, including Senator Orin Hatch, asked the IRS to respond to its investigation into digital currency exchanges. The response deadline is today, but whether the IRS has officially responded to Congress has not yet been announced.