Thursday, 21 September 2023

Crypto News

Coin Center responds to US lawmakers’ request for crypto tax guidance

Coin Center responds to US lawmakers' request for crypto tax guidance

Cryptocurrency advocacy group Coin Center has provided suggestions for United States lawmakers to consider in potential legislation related to taxation of digital assets.

In an Aug. 21 letter to Senators Ron Wyden and Mike Crapo, Coin Center pointed to the Virtual Currency Tax Fairness Act — a bill previously introduced in other sessions of Congress — for provisions including having the Internal Revenue Service (IRS) establish a De Minimis exemption for crypto transactions. The measure could be aimed at encouraging crypto as a method of payment by treating digital asset transactions like ones used to purchase foreign currency.

Secondly, the advocacy group called for lawmakers to consider not applying U.S. tax law reporting requirements for second parties to digital assets. According to Coin Center, a U.S. crypto user could be legally required to provide “incomplete or non-existent” information on senders of digital assets, creating privacy concerns and an undue burden on filers.

“Forcing ordinary people to collect highly intrusive information about other ordinary people, and report it to the government without a warrant, is unconstitutional under the Fourth Amendment,” said Coin Center. “Demanding that politically active organizations create and report lists of their donors’ names and identifying information to the government is unconstitutional under the First Amendment.”

Other suggestions for Wyden and Crapo to consider included revising the IRS definition of a broker to explicitly exclude crypto miners and lightning node operators, among others, as well as limit the agency’s authority to issue legal summons for alleged tax evaders. The advocacy group cited a 2016 case in which the IRS issued a subpoena to Coinbase with a “John Doe” summons, allowing the agency to gain a large amount of user data from individuals who may not have been involved in any potential tax reporting violations.

Coin Center added on the matter:

“If we set a precedent that merely dealing in bitcoin could result in a firm’s customers easily losing their financial privacy, it would have severe consequences for bitcoin and the related blockchain ecosystem.”

Related: Study claims 99.5% of crypto investors did not pay taxes in 2022

According to Coin Center, the…

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