September 2022
October 2021
August 2021
IRS is advised to reconsider creating amnesty program for cryptocurrency.
Practitioners suggest that the IRS should reconsider its position on having a voluntary disclosure program for cryptocurrency. “I think the IRSwould be remiss if it didn’t go back and look at that again,” Mishkin Santaof the Wolf Group PC said on an August 24 webinar hosted by the District of Columbia Bar Taxation Community.
US Senate passes bill that expands cryptocurrency reporting requirements.
The Senate votes 69-30 to advance the Infrastructure Investment and Jobs Act (H.R. 3684). The bill contains Section 80603, which would broadly expand information reporting requirements and the definition of broker for certain cryptocurrency providers. The bill largely follows the Treasury proposals from May 2021.
US lawmakers seek an expanded definition of “broker.”
Bipartisan co-chairs of the Blockchain Caucus send a letter to the House of Representatives asking them to take up the issue of the expanded definition of “broker” under Section 80603. The letter states that noncustodial blockchain technology providers like validators and software developers are not middlemen between parties to exchange, do not have customers, and have no way to collect this information. As a result, the requirements of Section 80603, as currently drafted, could drive blockchain software development, cryptocurrency mining, and similar opportunities out of the United States.
June 2021
IRS asserts that like-kind exchange rules cannot be applied to cryptocurrency trades.
The IRS issues IRS Legal Memorandum 202124008 and asserts that Bitcoin-Ether trades and swaps of either currency for Litecoin were not eligible for Section 1031 like-kind exchange treatment before the Tax Cuts and Jobs Act of 2017 restricted that provision to real property.
US lawmakers seek changes to tax form for charitable contributions of cryptocurrency.
A bipartisan group of seven lawmakers asks the IRS to amend Form 8283 so that a taxpayer making a charitable contribution using cryptocurrency can report the donation value under Section A as they would do for securities or other assets with readily ascertainable price indexes.
El Salvador passes law to make Bitcoin legal tender.
El Salvador’s Legislative Assembly passes a bill making it the first country to classify Bitcoin as legal tender.
IRS discloses use of special team to address cryptocurrency tax noncompliance.
IRS Fraud Enforcement Office Director Damon Rowe notes his office’s use of an emerging threat mitigation team to investigate cryptocurrency tax noncompliance.
May 2021
US proposed tax law changes include reporting of cryptocurrencies on FBAR-like form.
The US Treasury releases the “Green Book,” which contains several proposals related to cryptocurrency broker rules and a cryptocurrency “FBAR” that individuals would have to report.
Australian tax authorities announce plan to contact cryptocurrency owners.
Australian tax authorities say they will contact 100,000 taxpayers who held cryptocurrencies in prior years because many of them mistakenly believe that gains on cryptocurrency sales are tax free or taxable only when cashed in.
US court case challenges taxation of staking activities.
In Jarrett v. United States, No. 3:21-cv-00419 (M.D. Tenn. 2021), Joshua Jarrett claims that the tokens he received in 2019 validating transactions in the cryptocurrency Tezos via a process called staking are not subject to tax. He argues that he created the tokens he received for validating transactions.
US proposed legislation seeks to protect taxpayers until IRS issues guidance on forked assets.
Rep. Tom Emmer, R-Minn. introduces legislation to prohibit penalties against taxpayers attempting to report certain gains or losses on “forked assets” until the IRS issues sufficient guidance on how to do so.
US District Court allows IRS to collect limited data from Kraken.
A California District Court approves a narrowed request for a John Doe summons to allow the proceeding against cryptocurrency exchange Kraken to move forward.
April 2021
IRS releases a memo that helps clarify its stance on hard forks.
IRS releases IRS Legal Memorandum (ILM) 202114020, which provides a helpful discussion of a typical hard fork event, as that term is understood within the cryptocurrency community. By contrast, in its October 2019 guidance (Rev. Rul. 2019-24, IRB 2019-44 p. 1004), the IRS described a hypothetical situation involving a hard fork followed by an airdrop.
March 2021
HMRC publishes cryptoasset taxation manual and guidance on “staking.”
The UK tax authority publishes a new cryptoasset taxation manual comprising previous advice and new guidance on the tax treatment of “staking” activities carried out by businesses and individuals. The manual incorporates policy papers published in 2018 and 2019 for individuals and businesses holding four types of cryptoassets: exchange tokens, utility tokens, security tokens, and stablecoins.
The State of Kentucky offers tax exemption for commercial cryptocurrency mining.
Kentucky H.B. 230, as signed into law, incorporates definitions and tax exemption application procedures regarding commercial cryptocurrency mining into the state tax code.
February 2021
Cryptocurrency investigations in Denmark yield $4.9 million from 541 cases.
The Danish Tax Agency announces it collected $4.9 million in unpaid taxes as a result of 541 investigations of crypto traders that dealt in Bitcoin, Ethereum, and Ripple.
January 2021
US taxpayer contends expectation of privacy in use of cryptocurrency exchange.
In Harper v. Rettig, No. 1:20-cv-00771 (D.N.H. 2021), James Harper contends he had a contractual expectation with cryptocurrency exchanges that his data would not be shared without due process, while the Justice Department asserts that Harper sacrificed any privacy claims by transacting with third parties.
December 2020
US FinCEN announces its intent to make virtual currency accounts reportable on the FBAR.
In Notice 2020-2, the US Financial Crimes Enforcement Network (FinCEN) says it will propose to amend regulations regarding foreign bank account reports (FBARs) to include virtual currency accounts as a type of reportable account.
Bruno Block is indicted on tax evasion in the US.
Amir Bruno Elmaani, known online as “Bruno Block,” hid the vast bulk of his income from the initial coin offering of Pearl tokens behind nominees, while spending millions. The Justice Department announces Elmaani’s indictment in United States v. Elmaani, No. 20-cr-661 (S.D.N.Y. 2020), on two counts of Section 7201 tax evasion after he is arrested in West Virginia.
