One thing that can pose difficulties for taxpayers when it comes to these new financial options is uncertainty regarding the tax-related treatment of these options. Such uncertainty could potentially lead to a taxpayer inadvertently taking tax steps that result in them being assessed a tax debt or facing other problems with tax officials.
One thing that can cut down uncertainty when it comes to the tax treatment of relatively new financial devices, transactions or options is the Internal Revenue Service issuing guidance on such treatment.
Virtual currencies, like Bitcoin, are one of the new types of assets that have come up in the digital age. The IRS has issued guidance in the past regarding tax issues related to this new asset type. However, a panel of a CPA organization has argued that there remain areas of tax-related uncertainty when it comes to virtual currencies and that further IRS guidance is needed regarding these areas. Among the things the panel has recommended the IRS make clarifications regarding include:
One wonders if guidelines regarding these issues will be issued in the future and, if they are, what impacts this will have on how clear the tax rules related to virtual currencies are.
When an unclear tax rule environment regarding virtual currencies or other new financial devices/transactions leads to a taxpayer facing allegations of misreporting income on their taxes and having unpaid taxes, it can be critical for them to understand their options for responding to the accusations. Tax attorneys in Chicago and Cleveland can give representation and guidance to taxpayers accused of owing back taxes or facing other tax problems.
Source: Bloomberg BNA, “Virtual Currencies Still Dogged by Tax Issues, CPAs Say,” Allyson Versprille, June 14, 2016