Five congressmen have signed a letter stating they will ask the Government Accountability Office (GOA) to audit IRS over their handling of crypto taxation.
The congressmen criticize IRS over lack of clear guidance on how taxation rules apply to cryptocurrencies, with the report citing concerns by the Association of International Certified Professional Accountants, the American Bar Association, and other organizations.
Despite such unclear guidance, IRS has undertaken “robust enforcement actions on a number of fronts,” the letter says, pointing to IRS’s summons seeking “the records of approximately half a million Americans who held virtual currencies between 2013 and 2015,” on Coinbase.
Coincentre calls that summons an “overly broad fishing expedition,” further stating the congressmen had asked IRS to “consider a de minimis exemption for small transactional use of cryptocurrencies.”
The congressmen themselves say they will be asking the government watchdog to look at the way IRS has handled crypto taxation. They say:
“We strongly urge the IRS to expeditiously issue more robust guidance clarifying taxpayers’ obligations when using virtual currencies.
We also ask that you provide a written response outlining where the IRS is in its efforts to issue updated virtual currency guidance, what the IRS intends to cover in this guidance, and a timeline for its release.
In addition, to assist the Committee in better understanding this issue, we will be asking the Government Accountability Office to undertake an audit on this matter.”
The Government Accountability Office (GAO) is an independent and non-partisan government agency that reports to the U.S. Congress.
They server as a congressional watchdog to keep government agencies accountable to congress, with GAO taking audits and reporting to congress.
Based on that report it may well be congress itself takes action by passing new laws on crypto taxation, something which they haven’t done so far.
That may have allowed IRS to usurp congressional authority by the unelected agency effectively making new law through their interpretation of older laws.
The UK HMRC, for example, has not classified cryptos either as a currency or as a commodity for tax purposes, stating that is a matter for parliament with tax rules applied depending on whether it is used as a currency or as a commodity.
IRS, in contrast, has taken it upon itself to declare cryptos as a commodity, applying burdensome requirements when they are used as a currency.
That may change as congress is looking to pass a law which exempts crypto taxation when payments of up to $600 are made. Something which may be more accommodating of cryptocurrencies.