Eight members of the U.S. Congress recently wrote to the Internal Revenue Service (IRS) urging the agency to further clarify cryptocurrency tax laws.
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The letter, signed by eight U.S. congressmen on December 20, said:
"We wrote in April this year urging the publication of guidelines for taxpayers using cryptocurrencies, and we are pleased to see that you have published the guidelines and addressed many of our questions. However, we are concerned that this latest The guide raises many new issues related to the subject matter they are addressing, namely forks and airdrops. "
According to Cointelegraph, the IRS originally issued an official ruling on cryptocurrency taxation expectations on October 9, 2019. The ruling points out several taxation points, including taxes on holders of cryptocurrency forks or airdrops, whether or not the holders are aware of such airdrop or post-airdrop price behavior.
The letter of December 20 details that the original IRS October 9 ruling used hypothetical examples as references, which were not actually applicable or reasonable, and therefore unclear to taxpayers.
The letter identified the "ruling and control" of the IRS ruling on Oct. 9 in relation to forks and airdrops, calling for transparency in the matter. Due to the lack of clarity around each specific point that triggers a taxable event, the recipient of a fork or airdrop may face taxation without knowledge of such events.
The letter also states that current IRS rulings lack guidance on various cryptocurrency-based financials, including futures trading and interest earned on digital asset deposits, as well as all cryptocurrency-based revenue.
In addition, the letter requires decisive action on tax reporting and withholding taxes, such as the use of Form 1099 and the subject of retroactive enforcement.
At the conclusion of the letter, MPs wrote:
"Some of us are concerned that the format of this guide seems to indicate that this is" established "law. We hope the IRS recognizes that this area is new and developing and will allow reasonable explanations before the latest guide is released.
Last month, Cointelegraph explained that IRS rules do not allow cryptocurrency participants to use similar exchange tax exemptions.