Julie Foerster, director of cryptocurrency taxation at the Internal Revenue Service (IRS), said the agency aims to issue cryptocurrency tax guidance within 12 months.
Foerster said the IRS views cryptocurrencies as convertible virtual assets that can be used to pay for goods and services, digitally traded between users, and exchanged for other currencies.
Although they are not considered legal tender, they are considered property for federal tax purposes and users must report their digital asset activity on tax returns.
As digital assets continue to evolve, regulators need to strengthen communication with the cryptocurrency community. The IRS is planning changes to its handling of cryptocurrencies and wants to work more with the industry. Foster emphasized that her views are personal and not those of the IRS.
Developing clear and concise guidelines for cryptocurrency taxation has been a pressing issue, as the lack of clarity has led to taxpayer confusion and legal issues.
The IRS has been working to provide more comprehensive guidance, and the planned new guidance is an important step toward that goal.
Cryptocurrencies are becoming more and more popular, with more and more individuals and businesses using it for transactions. The IRS’ decision to issue new guidance will help taxpayers better understand their tax obligations and enable the IRS to more effectively enforce tax compliance.
The cryptocurrency industry welcomed the IRS announcement and expressed its willingness to work with the agency to develop a clear and fair tax framework.
Having a clear regulatory framework will not only benefit taxpayers, but will also facilitate the growth and development of the cryptocurrency industry.
