The crypto advocacy group proposed a de minimis exemption for cryptocurrency transactions as well as having the IRS provide guidelines on block rewards, airdrops, and hard forks.

The cryptocurrency advocacy group Coin Center has made recommendations for US lawmakers to consider in prospective legislation regarding digital asset taxes.

Coin Center pointed to the Virtual Currency Tax Fairness Act — a bill previously introduced in other sessions of Congress — in an Aug. 21 letter to Sens. Ron Wyden and Mike Crapo for provisions, including having the Internal Revenue Service (IRS) establish a de minimis exemption for crypto transactions. The policy could be designed to encourage the use of cryptocurrency as a payment method by treating digital asset transactions similarly to those used to purchase foreign currencies.

Second, the advocacy organization urged Congress to reconsider extending US tax law reporting obligations for third parties to digital assets. According to Coin Center, a crypto user in the United States may be legally compelled to give "incomplete or non-existent" information on digital asset senders, raising privacy concerns and imposing an excessive burden on filers.

“[F]orcing ordinary people to collect highly intrusive information about other ordinary people, and report it to the government without a warrant, is unconstitutional under the Fourth Amendment,” said Coin Center. “[D]emanding that politically active organizations create and report lists of their donors’ names and identifying information to the government is unconstitutional under the First Amendment.”

Screen Shot 2023-08-22 at 10.24.03 AM.png

Other ideas for Wyden and Crapo include amending the IRS definition of a broker to clearly exclude crypto miners and Lightning node operators, among others, and limiting the agency's jurisdiction to issue legal summonses for alleged tax evaders. The advocacy organization referenced a 2016 case in which the IRS issued a "John Doe" summons to Coinbase, allowing the agency to obtain a substantial amount of user data from individuals who may not have been involved in any potential tax reporting issues.

Coin Center added on the matter:

Screen Shot 2023-08-22 at 10.24.38 AM.png

According to Coin Center, the IRS should also consider providing tax advise on block rewards, airdrops, and hard forks, as well as not requiring a qualified appraiser for certain bitcoin donations. The recommendations came in response to a July request from the United States Senate Financial Services Committee, which would collect replies on crypto tax guidance through September 8.

Addressing the tax gap — the difference between taxes owing and taxes paid to the government — has been an ongoing concern in the United States as the crypto industry has grown. Though some legislation has sought to address some of the concerns of cryptocurrency taxation, notably the bipartisan infrastructure bill enacted in November 2021, critics of the proposal have pointed to almost insurmountable reporting requirements for retail investors.

Online trading of global popular cryptocurrencies such as Bitcoin/Ethereum/Teder/Binance Coin

Start trading now >

The newcomer will immediately receive a $100 gift!

Trade

Market

Market Analysis

Trading Tutorial

Bonus rebate to help investors grow in the trading world!