The IRS is here again! Tax assessment required for single cryptocurrency donations exceeding $ 5,000

The Internal Revenue Service (IRS) updated its Frequently Asked Questions (FAQ) on Thursday, stating that donors who donate more than $ 5,000 in cryptocurrencies to charities must conduct tax assessments of their donations.

This could affect the booming of cryptocurrencies in philanthropy. "This new assessment requirement will make people hesitate to donate more than $ 5,000," said Alex Wilson, co-founder of cryptocurrency charity The Giving Block.

Wilson said that the cost of conducting the assessment is high, and tax filing in the United States is inherently complicated.

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"Any 'qualified appraiser' will only go to CoinMarketCap, spend 30 seconds looking at the price, and then charge you $ 500."

He says:

"I think the result may be that those who originally intended to donate $ 10,000 may decide to donate only $ 4,999 because it is easier and does not require a painful valuation process. The main reason for donating cryptocurrencies to non-profit organizations is , It is not a taxable event. "

Of course, it is not those crypto millionaires who are affected by this, but those who have hired valuers.

Tax lawyer Lisa Zarlenga said there aren't that many valuers qualified to evaluate cryptocurrencies at the moment-even if all they do is use exchange rate value. she says:

"This will make it harder for taxpayers to donate more than $ 5,000 in cryptocurrencies."

Zarlenga said, but the IRS will not introduce new rules, the IRS only explained existing problems in the FAQ.

Wilson agrees:

"So far, whether an evaluation is needed is still a grey area.Some people think that the evaluation is safe. Others think that since the price of most cryptocurrencies is public, no evaluation is needed."

However, he considers such restrictions too arbitrary.

"It seems a bit ridiculous. I hope this is just a temporary measure and we plan to let the IRS work around this issue."

IRS supervision of cryptocurrencies is still ongoing. In October this year, the IRS issued new rules for hard forks, but legal experts said the new rules made the situation worse. The guide attempts to clarify how people should file taxes if a hard fork produces a new currency-even if the holder is not the originator of the fork.

Organizations such as the Electronic Frontier Foundation, UNICEF and Binance Charitable Foundation all accept donations of cryptocurrencies. Will they be the latest victims of the IRS?

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