Time to End US Crypto Tax Declaration ‘Forensic Exercise’ – Expert
A USA-based tax expert has hinted that the ball may be in the Internal Revenue Service (IRS)’s court when it comes to taxing crypto – and suggested that most crypto investors are not tax dodgers, but simply require a non-“forensic” solution to filing taxes on their earnings.
The comments were made by Roger Brown, the Head of Tax and Regulatory Affairs at Lukka, a data and software company that specializes in transactions involving digital assets. He was speaking at a session entitled “Whack-a-Mole: Crypto Tax Treatment Around the Globe” at the Coindesk’s Consensus digital summit today.
Although he conceded that the rapid pace of development in the crypto sphere meant regulators were essentially trapped in a game of catch-up, he hinted that the current state of play in the United States – which often requires traders to make complex historical calculations based on prices at the time of transactions – was prohibitively complicated.
He said:
“Most people believe that information-reporting is beneficial to [the crypto] ecosystem. Most people are not […] trading crypto to avoid taxes. They are interested in making money and they don’t want a forensic exercise.”
Brown noted that “other areas” of the financial system “don’t require forensic investigation” to declare trades and transactions in tax forms.
He also claimed that United States-based crypto exchanges are now “participating in conversations” with tax firms as they seek to help bridge the increasingly large gap between crypto traders and tax bodies
Some disgruntled American crypto traders have attempted to mount legal cases again the IRS for taxing them on staking rewards – upset that these taxes have been made on cryptoassets that had not yet been traded for fiat.
Speaking at the same session, Luis F. Rodríguez, Partner at One Hundred Ventures, agreed, stating:
“The IRS and the Treasury will have to do something and standardize the [crypto tax] system in the United States.”
And on an international note, Brown also opined that while much has been made of the fact that global regulators will need to streamline their policies in order to tax crypto more effectively, this may not in fact be possible.
“It’s not possible that any tax authority in any country will put out comprehensive [crypto tax] guidance, as the industry is changing all the time,” Brown said.
Michelle Harding, a Senior Economist and the Head of the Tax Data and Statistical Analysis Unit at the OECD’s Center for Tax Policy and Administration, added that her organization’s research of crypto tax regulations in 50 jurisdictions had found that “for income tax purposes, most countries treat [crypto] as a form of property,” rather than as forms of currency.
However, she conceded that the exact legal classification of property type often varied from country to country.
She also noted that when it came to crypto gifts and losses, most countries’ tax codes had “little information on this.”
Harding claimed that tax bodies also needed to deal with “emerging challenges” – including creating “guidance for hard forks and staking, as “few countries have issued guidance for this.”
She concluded that there was also “little or no guidance for stablecoins and central bank digital currencies (CBDCs),” as most governments have thus far focused on tax rules for “payment coins” – assets such as bitcoin (BTC) and major altcoins.
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Learn more:
– Spanish Crypto Investors Set to Be Taxed on ‘Overseas’ Holdings
– IRS Could Come For Your Crypto If You Owe Them – Official
– ‘Guys, File Your Crypto Taxes, the IRS is Coming’
– Collect Taxes More Effectively to Avoid ‘Debt Trap’ Chaos, Warns IMF
– Biden ‘Tax Plans’ Speculations Spook Crypto Speculators
– Crypto and Tax in 2021: Be Ready to Pay More
