Those following the ongoing Internal Revenue Service court battle with Coinbase will recall that several members of Congress sent a letter in late May requesting details from the IRS about its efforts to investigate the Coinbase Bitcoin exchange and obtain the company's user account information. The agency was given until June 7 to provide a response to those questions. Though IRS compliance with that oversight request has yet to be confirmed, there is news that a second group of elected representatives is now attempting to get answers about how the agency plans to deal with digital currency tax concerns.
Representatives David Schweikert and Jared Polis authored a letter addressed to IRS Commissioner John Koskinen, urging his agency to “issue additional guidance on the tax consequences and basic tax reporting requirements for transactions using virtual currencies.” The letter notes the importance of ensuring that clear guidelines are in place to help taxpayers meet their legal obligations:
“While the IRS has taken steps to provide some information to tax payers regarding the tax treatment of virtual currency, additional information and guidance could assist businesses that facilitate virtual currency transactions and purchases and individual tax payers to increase reporting on income gained or loss on virtual currency transactions.”
The two Representatives urge the IRS to give proper consideration to its Inspector General’s advice for increased taxpayer compliance, and recommend that the agency make an effort to talk to digital currency exchanges like Coinbase to learn more about how those companies can help with reporting and the identification of taxable transactions.
Most in the digital currency community will be pleased to see that some in Congress are acting to exercise their power of oversight to reign in what many see as an overreach by the tax agency. As Senator Hatch and his group noted in their May letter to the IRS, the agency has had several years to provide taxpayers with the clear guidelines needed to facilitate tax compliance, and has failed to do so. Perhaps increased intervention from Congress can finally motivate the IRS to provide that needed guidance.