In a letter sent today to IRS Commissioner John Koskinen, Reps. Jared Polis and David Schweikert asked the IRS to take action on recommendations the Treasury Inspector General for Tax Administration made last year, which dinged the IRS for not providing sufficient clarity to tax payers and digital currency exchange.
We encourage the IRS to consider the recommendations of the TIGTA and take action based on those recommendations to increase taxpayer compliance with Notice 2014–21. Further, we encourage the IRS to engage with virtual currency exchanges to better understand their ability to engage in information reporting, including recordkeeping to track realized gain or loss and identify the amounts of virtual currency used in taxable transactions.
Had the IRS made tax reporting clearer and simpler, as the letter suggests it consider, perhaps they would not have felt the need to issue its incredibly overbroad John Doe Summons of a million digital currency users. We applaud Reps. Polis and Schweikert for taking leadership on this issue, and we look forward to working with them on other important tax issues, like creating a de minimis exemption for digital currencies.