Know The Tax Laws Regarding Forked Coins? Nobody Does! Congressman Wants Law to Stop IRS from Penalizing People Until They Explain...

Congressman Tom Emmer has shown himself to be one of the few elected officials with a genuine grasp on the cryptocurrency markets.

We first mentioned him last year when he announced his intent to bring much needed clarification to several grey areas that cryptocurrency holders trying their best to follow the rules have been forced to guess in the meantime.

The following announcement was just sent to us, directly from his office.

WASHINGTON, D.C. - Today, Congressman Tom Emmer (MN-06) reintroduced the Safe Harbor for Taxpayers with Forked Assets Act, which prohibits penalties against taxpayers until the IRS issues guidance on how to report gains or losses in "forked" digital assets. 

In 2014, the IRS issued guidance which treats digital assets like property. Since then, no guidance has been issued on a number of reporting questions, including forked digital assets. Congressman Emmer led a letter along with 20 members of Congress to the IRS urging additional guidance. On May 30, Commissioner Rettig confirmed that guidance would be coming “very soon.” More than 30 days later, no guidance has been issued. 

This bill would establish a safe harbor for taxpayers attempting to report gains or losses in these forked digital assets. “Forks” are splits in digital assets that result in two independent digital ledgers. For example, Bitcoin and Bitcoin Cash. The bill would provide assurance for taxpayers that they will not be penalized for reporting this information to the IRS. The prohibition on penalties would continue until the IRS establishes a set of rules regarding the tax treatment of forked cryptocurrencies. 

The bill is a reasonable way to insulate taxpayers from potential liabilities that are no fault of their own, stemming primarily from the present lack of clear guidance on forks from the IRS. Taxpayers are only able to comply with tax laws when the law is clear and individuals that attempt to report these assets have been unfairly targeted. Until the IRS provides specific guidance regarding the appropriate means of reporting them, these individuals should receive a safe harbor.  

Following the reintroduction, Congressman Emmer released the following statement, "Legislators should be embracing emerging technologies and providing a clear regulatory system that allows them to flourish in the United States. Taxpayers suffering from the uncertainty of tax guidance are being unfairly punished for investing in an emerging technology. This safe harbor will protect the taxpayers until the IRS addresses this important issue.”

You can read the full bill here.

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Author: Justin Derbek
New York News Desk