IRS Hires Private Sector Experts to Navigate Crypto Tax Compliance
The Internal Revenue Service (IRS) is poised to utilize funding allocated through the Inflation Reduction Act (IRA), a federal legislation aimed at mitigating inflation, to bolster compliance initiatives in emerging sectors, with digital assets being prioritized.
Recent developments within the IRS include the recruitment of two seasoned crypto tax specialists from the private sector, Sulolit Mukherjee and Seth Wilks, who have been appointed as executive advisors. These appointments reflect the IRS's commitment to enhancing its capabilities in managing digital assets.
As the official tax filing season kicked off on January 29, the IRS reiterated its call for taxpayers to accurately report all income generated from cryptocurrencies and digital assets, encompassing nonfungible tokens (NFTs), rewards, and staking proceeds.
IRS Commissioner Danny Werfel emphasizes the importance of leveraging private sector expertise to establish a robust digital assets infrastructure that benefits all stakeholders.
The IRS's allocation of IRA funding underscores its dedication to fostering compliance in evolving sectors, notably digital assets. Notably, taxpayers in the U.S. are exempt from reporting cryptocurrencies held in wallets or transferred between their own wallets, as well as those acquired using fiat currency.
In a recent policy reversal, the IRS opted to postpone the enforcement of a law requiring businesses to report cryptocurrency transactions exceeding $10,000. Despite being enacted on January 1, the regulation will be implemented following the release of a comprehensive regulatory framework.
The decision to delay this reporting requirement underscores the complexities involved in integrating digital assets into existing tax frameworks. The U.S. House Financial Services Committee has highlighted various shortcomings in the initial implementation of these reporting requirements, emphasizing the need for a more refined approach.
