Taxation of cryptocurrencies in the United States

Endy Callahan

Eight members of Congress sent a request to Internal Revenue Service (IRS) of the United States to clearly indicate their position on hard forks and airdrops for cryptographic currencies. The initiative was presented by Darren Soto, Matt Gaetz, David Schweikart, Bill Foster, French Hill, Tom Emmer, Lance Gooden and Warren Davidson.

What congressional representatives wanted to know from the IRS

Parliamentarians asked the following questions:

  • Will the tax service allow the management to make adjustments or will it react negatively to a request for consultation?
  • Will the fiscal department clarify its own position on airdrops and forks, taking into account their true nature? If so, what are the deadlines?
  • Are they going to publish the tax service standards, in accordance with which it will establish whether the payer was in control of the coins after the fork?

According to the parliamentarians, the current tax authorities ' guide to digital assets is incomplete, because it does not take into account the development of Bitcoin Cash and Ethereum. The current approach may result in an unfair and unjustified fiscal obligation.

The group asked tax authorities to investigate digital currency derivatives, digital coin deposit accounts, and pension accounts linked to crypto assets. A few months ago, Tom Emmer presented for the second time a draft law aimed at establishing tax regulations for airdrops and forks. At the end of the summer, Ted Budd took the initiative to exempt transactions with cryptographic currencies from double taxation.

The authors of the draft law (Token Taxonomy Act) propose not to tax transactions with digital money in the amount of less than $ 600. In the article "Regulation of cryptocurrencies in the United States", you can learn a lot about the current legislation in America regarding cryptocurrencies.

The US Congress has again introduced a draft law on the abolition of double taxation of transactions with digital money

Ted Budd, who is a member of Congress from North Carolina, once again suggested considering a draft law to remove cryptocurrency transactions from double taxation. In his opinion, the internal revenue code needs to be amended. They should indicate that cryptocurrencies are not considered as an object of ownership.

Today, the IRS considers Bitcoin as property. Therefore, its exchange for other services, assets or currencies is regarded as a sale, like real estate. As a result, the tax rate is 40%. Budd is sure that this situation hinders the spread of distributed registry technology.

The draft law initiates the abolition of double taxation of cryptocurrency transactions and their accounting.

Congress is considering several draft laws related to cryptographic currencies. In the spring of 2019, the Token Taxonomy Act was once again introduced, according to which adjustments are made to the securities trading Law and the securities Law. Its goal is to make sure that tokens are not defined as securities.

The US authorities intend to exempt digital currency transactions of less than 600 dollars from taxation

The draft law Token Taxonomy Act can exempt transactions with up to $ 600 from taxation. This statement was made by Jerry Brito, the Executive Director of the Coin Center company.

The draft law provides for changes in a number of points in the fiscal legislation. For example, in the case of income from transactions with cryptographic currencies up to $ 600, the owner of the assets may be exempt from the obligation to notify the Tax office of the receipt of profits.

Brito said that regulators may require data on the increase in capital when using cryptocurrencies in order to purchase simple things, including plane tickets or a laptop.

The authorities may be required to provide this information when signing the disclosure via a smart contract in the case of Ethereum expenses. The draft law was first presented in Parliament at the end of 2018. According to it, tokens will be excluded from the definition of securities, which was established in the 1930s.

The US tax office is developing a new guide to digital currencies

In the coming weeks, the IRS will present the latest version of the guide to Bitcoin and other digital currencies. The adjustments were made under pressure from more than 20 congressmen to provide clear answers on taxing such assets.

At the moment, the agreement from 2014 is valid. It defines cryptographic assets as "virtual currencies", they belong to the property class. Cryptocurrencies do not act as a legal means of payment, as is the case with Fiat money.

The situation may change, but at the moment it is not known what will be indicated in the new recommendations. Still, in a letter from the tax office addressed to Tom Emmer, the new version of the document will address how taxes are determined and other issues.

Representatives of the digital currency industry have leveled a lot of accusations at the us authorities due to the lack of clarity of regulation, which reduces the speed and efficiency of innovation. A number of Bitcoin-friendly lawmakers share such experiences.

As you can see, the IRS takes requests and pressure to define key concepts and regulations seriously. I want to believe that soon the participants of the cryptocurrency community will get answers to all their questions. If they achieve their goals, we can expect an increase in the exchange rate of Bitcoin and other cryptocurrencies.