Lawmakers call on IRS to amend form for charitable donations in crypto

Jun 11, 2021 | The Block News | 0 comments

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Members of Congress’s Blockchain Caucus advocated for clearer tax policy for crypto donations in a new letter to Internal Revenue Service Commissioner Charles P. Rettig. 

Congressional lawmakers have previously called on the IRS for crypto tax clarity related to forked assets, staking and other guidance on “basic reporting requirements.”

However, Thursday’s missive specifically related to what Congress members feel is “ambiguity” regarding appraisals for charitable donations.

The way in which taxpayers report charitable donations in cryptocurrency differs from rules around donating in dollars, and lawmakers say the different standard makes reporting needlessly complicated. Part of reporting crypto is determining fair market value at the time of sale or receipt, which the IRS said can be determined by the price of the crypto on an exchange or the price quoted in indices at the time of a transaction.

Lawmakers agree with this approach but are disappointed it does not extend to charitable contribution reporting. For donations more than $5,000, taxpayers can’t reference exchange prices or indices to determine value, but instead, have to complete a separate section that requires a “written qualified appraisal by a qualified appraiser.”

Representatives Tom Emmer (MN), David Schweikert (AZ), Ted Budd (NC), Josh Gottheimer (NJ), Darren Soto (FL), Bill Foster (IL) and Ro Khanna (CA) signed the letter calling on the IRS to amend Form 8283, which puts forth the alternative requirement for crypto donations.

“I urge the IRS to simplify this unnecessarily, and potentially unintended, complex reporting requirement for cryptocurrency donations by modifying Form 8283 to eliminate the appraisal requirement in the case of virtual currencies with easy to establish exchange or index prices,” read the letter.

However, lawmakers also offered alternative solutions. If the IRS finds it doesn’t have the authority to amend the necessary form, the caucus suggested it adopt a special definition for “qualified appraisal.”

The IRS has said it plans to release guidance related to crypto in the near future.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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