The US Internal Revenue Service (IRS) is hosting a summit to discuss the tax implications of crypto early this March. Meaningful clarification on bitcoin’s treatment, however, is not expected as the agency continues to leave tax issues around the asset unanswered.
In an effort to crack down on tax evasion in the crypto industry, the main revenue service of the United States is looking to meet with industry leaders. The IRS is set to hold a summit at its Washington, DC headquarters, where important topics regarding taxing the crypto industry will be discussed, Crypto Briefing reported.
The agency has reportedly invited multiple cryptocurrency companies and advocates to attend the summit and participate in the discussions on how the agency can “balance taxpayer service with regulatory enforcement.”
Topics under discussion at the summit will include regulatory guidance and compliance, preparing tax returns, issues for cryptocurrency exchanges, and technology updates. Each panel will last 90 minutes and feature speakers from the government and private sector, Cointelegraph reported.
Kristin Smith, executive director of the Blockchain Association advocacy group, said that the summit has been in the making for at least a month, with the IRS reaching out to industry participants at the beginning of the year. The summit, she said, could be used as an opportunity for the IRS to learn more about the ecosystem in order to regulate it better, said the Crypto Briefing report.
Over the 2019 tax year the IRS has increased its scrutiny of cryptocurrency users. Starting June last year, the IRS reportedly mass mailed targeted letters to those suspected of “misreporting” cryptocurrency transactions.
These notices are intended to “put taxpayers on alert” that they plan to start focusing on a certain area of noncompliance.
Other taxpayers reported full-on audits of cryptocurrency use. These audits may request recipients to list all blockchain addresses they control, records of all transactions related to these accounts – and even earnings from hardforks, faucets, and tipping.
As more people begin to use bitcoin for its privacy-protecting qualities, the IRS is likely to respond with novel approaches to identifying and tracing transactions. Those caught evading taxes with cryptocurrency may face steep penalties.
It is still unknown which companies and “advocates” have been invited to the summit. There have been no official announcements about the summit either, neither from the companies nor from the IRS. The only acknowledgment of the summit came from an unidentified IRS spokesperson, who confirmed that the event is indeed taking place.
The event invitation was extremely vague. Panelists from the private sector and the government “will share their views and engage with the audience, which will include IRS personnel from across the spectrum of tax administration, and individuals from other bureaus or offices within the Department of Treasury.”
However, despite the optimistic sentiment in the invitation, few expect the IRS to use the event as a learning opportunity. The news about the crypto-focused summit comes just days after the agency declined to clarify its stance on cryptocurrencies.
Despite publishing updated guidance regarding cryptocurrencies in October last year, many issues such as capital gains on micro transactions and earnings from unwanted airdrops remained unsolved.
The Government Accountability Office, a government agency watchdog in the US, introduced several recommendations on how to improve the agency’s guidance, but the IRS has so far declined to adopt them and clarify its stance on the new asset class.
Crypto holders in the United States need to know how to declare their assets on their 1040 form. This year’s tax return is the first to include a question on virtual currency, said the Cointelegraph report.