The Internal Revenue Service (IRS) has enlisted the expertise of two new cryptocurrency tax professionals from the private sector to concentrate on digital assets. Since the start of the official U.S. tax filing season on January 29, the IRS has been issuing multiple notices urging taxpayers to accurately report all income derived from cryptocurrency and digital assets, including non-fungible tokens (NFTs). It emphasizes that any cryptocurrencies received as rewards or through staking must be disclosed.
Surolit Mukherjee and Seth Wilkes, the two newly appointed IRS employees, have been brought on board as executive advisors to the department. The IRS highlighted their extensive experience in both tax and crypto industries, stating that they would play pivotal roles in shaping IRS initiatives related to servicing, reporting, compliance, and enforcement concerning digital assets. Commissioner Danny Werfel expressed confidence that leveraging private sector expertise would aid in establishing digital asset infrastructure that benefits all stakeholders.
To bolster compliance efforts in emerging areas like digital assets, the IRS intends to utilize funds from the Inflation Reduction Act (IRA), a federal law aimed at curbing inflation. It aims to establish robust reporting mechanisms and enforcement measures tailored to the unique challenges posed by digital assets. Despite the heightened focus on cryptocurrency taxation, U.S. taxpayers are not obligated to report cryptocurrencies held in wallets, transfers between personal wallets, or cryptocurrencies acquired using fiat currency.
Prior to the commencement of tax season, the IRS rescinded a law mandating U.S. businesses to report all cryptocurrency transactions exceeding $10,000. This move, enacted on January 17, followed concerns raised by various stakeholders regarding the practical implementation of the reporting requirements. The IRS clarified that digital assets are not currently factored into the determination of whether a cash transaction, or series of related transactions, meets the reporting threshold. The decision to roll back the regulation was made in anticipation of publishing a comprehensive regulatory framework.
