US Tax Considerations – A Quick Update on Newly Adopted W3C Payments Standard, Pending Legislation and an App to Track Crypto Tax Liabilities
In recent times, Coinbase has found itself the subject of a rather draconian Internal Revenue Service investigation into the identities of Coinbase users after the IRS claim only 802 taxpayers reported property transactions related to Bitcoin in 2015.
Additionally, the SEC recently declared the DAO was, in fact, a security but stated that they would not issue a blanket ruling on all ICOS, but would have to examine them on a case by case basis.
With the winds of change hitting the cryptoverse, I thought this edition of US Tax Considerations would focus on a roundup of some key happenings in the world of cryptocurrency.
Cryptocurrency Tax Fairness Act
On September 7, 2017, Representative Jared Polis (D – Colorado) and Representative David Schweikert (R – Arizona) introduced the Cryptocurrency Tax Fairness Act of 2017 to the House of Representatives for consideration.
The guidance issued by the Internal Revenue Service on March 25, 2014, Internal Revenue Notice IR-2014-36 IRS Virtual Currency Guidance explicitly stated convertible virtual currencies such as Bitcoin are to be taxed as property, creating a nightmare of recordkeeping for simple transactions such as purchasing a cup of coffee, a tank of gasoline or food. Transactions in cryptocurrency are capital transactions, requiring the taxpayer to maintain records calculating the capital gain or loss (long term or short term) of every transaction in cryptocurrency. Additionally, the taxpayer is required to report out all capital gains and losses for the year on their annual income taxes.
Polis and Schweikert believe (rightfully) this is an undue burden on the majority of individuals transacting in cryptocurrency. The gist of this proposed legislation is it would create a de minimus exemption for transactions below $600 USD of value – effectively eliminating the reporting requirements for capital gain and losses on these transactions.
Currently, there is no companion bill in the Senate, so it remains to be seen if this bill will see the light of day and possibly become law.
World Wide Web Consortium Moves to Develop Payment Request API “Beyond Basic Credit Card”
It would appear after the World Wide Web Consortium (W3C) has been pushing for a currency-agnostic web payment standard, and as of September 14, 2017, the new Payment Request API has moved from “Under Consideration” to “In Development,” meaning the API is currently being implemented into Chrome, Edge, Firefox, Webkit, Samsung Internet Browsers and Facebook.
This new API would support, “the secure deployment of third-party payment apps for proprietary payment methods…" which would include encrypted and tokenized cards, credit transfers, and inter-ledger payments.
Coin Tracking Info Web Application
I’ve often been asked about website resources to track all of the capital transactions when spending Bitcoin, Ethereum, and Altcoins. Before the Altcoin boom, generally it was very easy to track all the transactions between Bitcoin and cash, but once crypto-to-crypto trading became more mainstream in the world of cryptocurrencies, I could not find a resource which would make this exercise at least somewhat bearable.
Coin Tracking Info is hands down the most impressive piece of technology on the market today. Not only is it able to integrate all the trading data from multiple exchanges and wallets (personal wallet, Coinbase, Poloniex, Bittrex, etc.), the software calculates the current value, profitability, and generates income tax reporting for multiple countries. If you are looking for a solid piece of software to help with your reporting obligations, this is absolutely essential to use.
Please follow me on my blog @lpfaust if you enjoy my content.
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Contains a valuable information ti entire crypto community.
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@minnowspower thanks for checking out my post a including it on your top 20 of the day. I appreciate it. Tax is never a sexy topic, so I appreciate the time and consideration taken.
Thank you for the kind support...!!!
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thanks for sharing this post @lpfaust
@stranniksenya thanks for checking it out. I think the app works for most tax jurisdictions. I know it works for the US and the UK, so check it out and see if it works for you.
that is damn true..
@killerkuasha lets hope at least the first step in the right direction is taken with this first piece of legislation.
amigo #resteemia at your service
'World Wide Web Consortium Moves to Develop Payment Request API “Beyond Basic Credit Card”' world is innovative than we thought. nice sharing @lpfaust
ReSteemia
'UpVoted ReSteemed Commented'
@resteemia thanks for checking out the article. Tax stuff is never sexy, so I appreciate the support.
@lpfaust,
It's a browser based payment method isn't it friend? Very useful information you shared with us! Really appreciate your effort!
Cheers~
@theguruasia the API would create a programmable, agnostic payments module which is native in modern web browsers. It would effectively create a web standard for payments processing which is evolved to include cryptos and new payment methods in the future.
Brave new world.
excellent post with information, thanks.
Some great info you have provided thanks for sharing this
@blazing income tax is not sexy, so I appreciate that you've taken some time to check out this post. I appreciate it.
income tax is a burden
@blazing you won't get any argument from me on that statement. I doubt anyone who prepares income tax and /or represents taxpayers in front of the IRS would not disagree with you either.
Thank you for sharing this information. You earned a new follower. Unless that piece of legislation gets passed, I don't see cryptocurrency being used as a 'currency' by mainstream any time soon. It seems cryptocurrency right now is anything but a currency lol
@hswick glad to have you come onboard as a follower. I appreciate the follow and the upvote.
Not sure what the future of this legislation is. Honestly, the heat being felt by politicians over the Coinbase issue has been the genesis of this bill. I think it will get through the House, the Senate is another issue all together.
Truthfully, if this does manage to get passed into law, it will ease the reporting requirements for most transactions, but for larger transactions, an individual would still need records to justify their cost-basis in the event of an audit. So, if an individual opts to record their cost basis on a First In First Out Basis, you would still need a fairly comprehensive history. At least it's a first step in the right direction.
As cryptos become more widely used I think eventually Congress will be forced into tax reform for cryptos and eventually acknowledging the tax treatment of them as equivalent to fiat currency.
great and helpful information..
thank you for sharing this @lpfaust
Cheers!
@dinsha thanks for stopping by and checking out the post. Glad found it helpful.
Sounds Interesting and to be helpful one