In April, we mentioned that Congress had sent a letter to the IRS requesting additional guidance on crypto taxation and asking when such guidance may be issued. This month, we have the IRS’s reply. While the letter did not provide any specific details, it did acknowledge Congress’s specific questions and noted that guidance would be published “soon.”
According to a report in Tax Notes, Commissioner Rettig said at a tax conference on May 30 that guidance may be released in the next 30 days or so. The guidance may include both a revenue ruling and a revenue procedure.
The reply had said that IRS had, “been working with internal and external stakeholders to identify areas where needed and helpful additional guidance can be provided.”
“I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions and have made it a priority of the IRS to issue guidance. Specifically, your letter mentions (1) acceptable methods for calculating cost basis; (2) acceptable methods of cost basis assignment; and (3) tax treatment of forks. We have been considering these issues and intend to publish guidance addressing these and other issues soon.”
Soon might be sooner than we think, and the Commissioner’s letter removes any doubt that cryptocurrency tax rules and presumably reporting requirements are coming. Firms that offer, or plan to offer, cryptocurrency trading would be well-advised to begin taking a look at their cost basis and tax information reporting plans now and monitoring the upcoming tax guidance.