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IRS Crypto Summit a Sign the Agency Is Open to Industry Dialogue

March 3, 2020, 10:44 PM

IRS officials made an effort to better understand tax issues facing the cryptocurrency market during a summit several months after issuing the first guidance in the area since 2014.

Aside from the occasional query, government officials mostly stayed silent during the day-long event, allowing the industry participants to use the time to raise issues or questions. Attendees—from tax executives at large exchanges to CPAs and tax attorneys—said that outreach will need to continue to have a real impact.

The meeting comes at a pivotal time: The agency is trying to step up its enforcement in the cryptocurrency space, and is planning to flesh out guidance from October.

“The willingness of the IRS to engage us in forums like this and in conversations is actually a very healthy sign,” Sulolit Mukherjee, head of global tax information reporting at Coinbase, said at the Tuesday event.

During the summit, panelists discussed a range of issues including the challenges of imposing information reporting requirements on digital currency exchanges, like Coinbase and Kraken. Guidance on this issue is included in the IRS’s latest priority guidance plan.

Lisa Askenazy Felix, head of global tax at Kraken, told Bloomberg Tax she’s interested in the follow-up conversations that will come out of the event.

She stressed the IRS needs to continue engaging with the industry and people who understand the technology. The agency’s October guidance didn’t use some of the industry’s terminology correctly, she said.

“That just emphasizes why it’s so important for us to engage in a widespread government-industry dialogue,” Felix said.

More Open Dialogue

Panelists also emphasized the need for more regulatory clarity and asked the IRS to clear up questions on a new question on the Form 1040 that asks about crypto users’ 2019 transactions.

The event consisted of four 90-minute panels on technology updates, issues for digital currency exchanges, tax return preparation, and regulatory guidance and compliance. Each panel included a representative from the government and several private sector participants.

The summit wasn’t just a learning opportunity for the IRS, according to attendees. It also gave those active in the industry a chance to talk to and learn from each other.

“A lot of them don’t talk to each other and don’t understand where each of them are coming from,” said Rochelle Hodes, a principal in the Washington National Tax Office at Crowe LLP who previously worked at the Treasury Department.

“You can see that in some of the dialogue,” she said.

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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