A bipartisan group of the House of Representatives sent a letter to the Internal Revenue Service. As per reports, the group has 21 members who sent a letter on April 11. This move is to urge Commissioner Charles Rettig to update crypto guidelines. For instance, the guidelines are five-years old concerning cryptocurrency activities.
Reports suggest Tom Emmer leads the group that hails from Minnesota. The group aims to have a response from the IRS in a written format. The group also demands the response before May 15. The lawmakers request for new guidance on the application of principles to crypto trades. As per guidance, the official document of a government agency must clearly show the guidance. It must also include the regulations for trades and transaction of cryptocurrencies.
Official Document has not added FAQs since 2014
As per matter of fact, the existing official document has not included frequently asked question after 2014. However, the letter of the group motes the first identification and tax treatment of cryptocurrencies. It says taxpayers face some serious sort of problems. Therefore, they demand some preliminary guidelines to ease the process for taxpayers. Back in 2017, the IRS agreed to take action to improve the system.
In short, the letter says that the group acknowledges the guidance of agency, but there are still ambiguities. The ambiguities include several questions regarding federal taxation for virtual currencies. It also noted that they feel the urge for guidance on some serious issues. The letter showcases issues like methods for calculation of cost-basis, methods of cost-basis assignments and tax treatment.
But, the letter also notes that the IRS still remains silent to answer some complex questions of taxpayers.
Countries are grappling with the issue of Crypto use and taxation
On the other hand, various countries grapple the issue of crypto use and taxation. The tax authority of Japan weighs a proposal to impose different taxes. The country will impose taxes on different types of cryptocurrency activities. For instance, income earned, crypto-to-crypto trade, trading loss or gain, and small crypto settlements. As per records, it will also include the purchase of crypto-related activities.
While Japan sets formulations on tax systems, countries like the US and France are also not behind. Cryptocurrencies in the US have short and long-term capital gains and losses. On the other hand, France takes the lead in the European Union in terms of regulations. Recently, France announced legislation to recognize cryptocurrencies officially. It will also allow firms to engage in crypto activities. The Firms would need approval from the government to carry out crypto activities.
Finance sector bills to include licensing
Similarly, the financial sector bills will include optional and mandatory licensing. As per matter of fact, the license will require companies in the arena of the crypto industry. Reportedly, the firms would be subjects of regulations to add legal clarity. The benefit is that; it will stimulate innovation in the industry.
However, the certifications will provide protections against scammers and fraudsters. But, it will not protect them from any sort of losses.