On March 3, 2020, the Internal Revenue Service’s (“IRS”) held its Virtual Currency Summit (the “Summit”). The theme of the Summit was balancing taxpayer service and enforcement and it highlighted that education and increasing taxpayer compliance with respect to cryptocurrency are important goals to the IRS.
IRS Commissioner Rettig welcomed attendees to the Summit and highlighted some of the IRS’s cryptocurrency efforts. That morning, the IRS-Criminal Investigation division, which acted as the lead investigative agency, brought charges against foreign nationals that used cryptocurrency to launder money.1 Commissioner Rettig’s remarks made clear that cryptocurrency is a priority of the IRS and that the IRS is working with other federal agencies to address cryptocurrency matters and bring enforcement actions where needed.
During the Summit, some themes emerged.
- Taxpayers should make a good faith effort to report their crypto gains and losses. In the absence of affirmative guidance on a particular issue, taxpayers should determine a reasonable filing position and take consistent tax return positions.
- The IRS is committed to education of both its staff and taxpayers regarding the taxation of virtual currency.
- The IRS and tax advisers are concerned with anti-money laundering and Bank Secrecy Act compliance, including Foreign Bank Account Reporting (“FBAR”).
- IRS panelists and audience members discussed information reporting, and whether gains and losses from investing in and trading cryptocurrencies are reportable on Form 1099-B, Form 1099-K or another IRS form.
- The IRS is generally aware that it and the U.S. Treasury have broad regulatory powers in certain instances, but noted that legislative action might be required to effectuate a new tax policy.
- IRS personnel and audience members discussed open tax issues. Some of these issues include the treatment of crypto lending transactions, staking income and the treatment of staking and mining pools and payroll issues.
The Summit was attended on behalf of Seward & Kissel by Brett Cotler, a member of our Tax and Blockchain and Cryptocurrency Groups. For additional information about the IRS Virtual Currency Summit, please contact Brett Cotler at email@example.com or (212)574-1269.