The U.S. Internal Revenue Service (IRS) has recently bolstered its team with the addition of two seasoned professionals from the private sector, specializing in cryptocurrency tax matters. This move coincides with the start of the American tax filing season, which began on January 29th. The IRS has since reminded taxpayers to disclose all earnings from cryptocurrencies and digital assets, including Non-Fungible Tokens (NFTs).
IRS Strengthens Crypto Tax Advisory Team
Sulolit Mukherjee and Seth Wilks have joined the IRS as executive advisors, bringing their tax and cryptocurrency industry expertise to the agency’s service and enforcement programs. Their knowledge is expected to lead the development of effective cryptocurrency taxation and compliance initiatives. Danny Werfel, the IRS Commissioner, has expressed his confidence that leveraging private sector acumen will enable the creation of equitable crypto asset management structures.
Guidelines for Cryptocurrency Reporting and Taxation
In the U.S., certain cryptocurrency activities do not trigger reporting requirements; maintaining digital assets in personal wallets, transferring them between wallets under the same ownership, or acquiring them with fiat currency are exempt from disclosure. In a recent update, the IRS clarified that transactions exceeding $10,000 do not need to be reported for now, reversing a prior mandate requiring businesses to report such transactions. This clarification is pending the development of a comprehensive regulatory framework.
Moreover, the IRS has announced its intentions to harness resources allocated by the Inflation Reduction Act (IRA) to ensure compliance within the evolving cryptocurrency sector. The decision comes after the U.S. House of Representatives Financial Services Committee identified significant flaws in the original reporting regulations set at the beginning of the year.
These steps underscore the IRS’s commitment to adapting to the complexities of taxing digital currencies and stems from the growing need for clear guidance and regulation in the cryptocurrency space.