IRS Official Expects Crypto Tax Guidance in "12-ish Months" Amid Calls for Collaboration with Industry

IRS Official Expects Crypto Tax Guidance in "12-ish Months" Amid Calls for Collaboration with Industry

The US Internal Revenue Service (IRS) hopes to provide crypto tax guidance in "12-ish months," according to Julie Foerster, the agency's digital assets project director. Speaking at the Consensus 2023 event, Foerster stressed the need for collaboration between the IRS and the crypto community to ensure that the agency "gets it right" and builds a plan that works for all parties involved.

Foerster emphasized that the current landscape for digital assets is an evolving one, and that the IRS needs to change the way it looks at cryptocurrency. She stressed the importance of increasing communication between the agency and the crypto community, and urged people to comment on a March proposal to tax non-fungible tokens (NFTs) like other collectibles. The comment period for this proposal closes on June 9.

For federal tax purposes, cryptocurrencies are currently considered property and users are required to report their digital assets activity on their tax returns. However, Foerster's comments suggest that the IRS may be open to changing its approach to crypto taxation.

Foerster also revealed that the agency is talking to some of its foreign counterparts about best practices for crypto taxation. While she did not name the countries in question, she said that events like Consensus were providing the IRS with international perspectives on the issue.

Despite the need for greater collaboration and communication, Foerster also stressed the importance of voluntary compliance. The agency needs to find "other ways to get our message across" to ensure that users comply with their tax obligations, she said.

The announcement of potential new crypto tax guidance comes amid a period of increased scrutiny from regulators and lawmakers around the world. In the US, the IRS has been ramping up its enforcement efforts, and earlier this year proposed new rules that would require cryptocurrency exchanges to report transactions above a certain threshold.

Meanwhile, other countries are grappling with how to regulate the crypto industry. In India, the government has proposed a bill that would ban all private cryptocurrencies and create a framework for a digital rupee. And in China, regulators have cracked down on crypto mining and trading in recent months.

Despite these challenges, many in the crypto industry remain optimistic about the future of digital assets. At Consensus, attendees were buzzing about the potential for blockchain technology to transform everything from supply chain management to voting systems.

As the crypto industry continues to evolve, it's clear that tax guidance will be a crucial piece of the puzzle. Foerster's comments suggest that the IRS is taking this issue seriously and is committed to working with the community to find solutions that work for everyone involved.

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