Coin Center, a cryptocurrency advocacy group, has submitted recommendations to US lawmakers for potential legislation concerning the taxation of digital assets. In a letter addressed to Senators Ron Wyden and Mike Crapo on August 21, Coin Center highlighted certain provi sions of the Virtual Currency Tax Fairness Act, previously introduced in Congress. The proposed measures include urging the IRS to establish a de minimis exemption for cryptocurrency transactions. This exemption could encourage digital assets' use as a form of payment by treating such transactions similarly to foreign currency purchases.
Additionally, Coin Center suggested that US tax reporting requirements should not be extended to second parties involved in digital assets. The group emphasized that enforcing individuals to collect and report intrusive information about other individuals to the government without a warrant or compelling politically active organizations to disclose donor details could be deemed unconstitutional. Another proposal pertains to amending the IRS's definition of a broker to explicitly exclude entities like cryptocurrency miners and operators of Lightning nodes. The advocacy group also suggested restricting the IRS's power to issue legal subpoenas to suspected tax evaders without proper justification.
The IRS was encouraged to provide guidance on the tax treatment of block rewards, airdrops, and hard forks and to waive the requirement for qualified appraisers to evaluate certain cryptocurrency donations. Coin Center's recommendations follow a request by the US Senate Financial Services Committee in July for input on cryptocurrency tax guidance. Addressing the tax gap—the disparity between owed and paid amounts to the government—has been an ongoing concern as the cryptocurrency space continues to expand. While some legislation has aimed to tackle taxation issues re related to cryptocurrencies, concerns have arisen regarding the feasibility of reporting requirements for retail investors.
