As cryptoassets took center stage in the mainstream media this week, the Internal Revenue Service (IRS) indicated it is continuing to move forward with getting a handle on issues and reporting, amid a dearth of guidance.
The IRS in October announced that it established a digital asset project office to address crypto issues. According to the new head of the office this week, “There was a recognition enterprise-wide that digital assets [are] big and that we should have a dedicated staff to address strategy, priorities, and then activities.” The office will be staffed with seven full-time IRS employees, the official said. The official was quoted as saying the digital asset office will establish strategies and priorities over the coming 12 to 18 months.
The IRS reportedly is currently drafting questions on cryptocurrency and digital assets that will be added to corporate and partnership returns, including questions for individuals. The IRS began asking a crypto asset question on Form 1040 in 2019 but is now poised to begin collecting information from entities.
The IRS also released the 2020 Statistics of Income report (pdf) on 18 November, showing that there was an almost 150% increase from 2019 to 2020, for taxpayers who checked “yes” on their returns in response to the question of whether they had cryptocurrency transactions. Over 2.3 million individual returns reported they had such transactions in 2020.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
- Arlene Fitzpatrick
- Joshua Ruland
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
