IRS advisory committee calls for clearer tax guidance regarding crypto

On October 24, 2018, the Information Reporting Program Advisory Committee (IRPAC), an advisory committee to the IRS, released its annual report detailing the recommended improvements to the tax code. Amongst many other recommendations in the 95-page report, IRPAC dedicated multiple sections to cryptocurrencies and recommended “that the IRS issue further guidance on the information reporting and withholding implications of cryptocurrency transactions.” 

The IRS hasn't released new cryptocurrency guidance since 2014 when it ruled that virtual currencies shall be treated as property for tax purposes. That means that every taxable event, which includes purchases in cryptocurrency, is currently taxed at capital gains rate. Fundstrat released a report in April that estimated cryptocurrency-related U.S. tax liabilities at $25 billion and noncompliance rate at approximately 50%. IRPAC's report concludes that: "many, if not most, taxpayers will report these activities correctly if they are able to determine the implications of their cryptocurrency activities." (Source: Bitcoin Magazine)