The value of digital currency has skyrocketed over recent months, but because of its constant fluctuations in value, taxing digital currency transactions has proven to be incredibly complex. Congress is hoping to make the reporting process easier with a bill they have introduced known as “The CryptoCurrency Fairness Tax”.
What Is “Digital Currency”
Digital currency is not tangible like a coin or a bill. This form of computerized currency is exchanged through the use of computers, mobile devices, credit cards and the Internet. It can, however, be turned into physical money if withdrawn as cash from an ATM.
How the CryptoCurrency Fairness Tax Works
Despite digital currency becoming increasingly common – in 2015 only 802 taxpayers reported any bitcoin gains or losses in 2015. The agency believes that there are likely far more individuals who owe unpaid taxes on these types of transactions.
If The CryptoCurrency Fairness Tax bill passes into law, digital currency transactions valued less than $600 would be exempt from being reported to the federal government. This new bill also means that some reporting of these types of transactions wouldn’t be necessary.
Congress is hoping that the introduction of this bill will encourage the Treasury Department to put together guidelines about the reporting of digital currency exchanges, sales, gains and losses.
A Potential Shock to Digital Currency Owners
Since the beginning of this year, there has been a substantial fluctuation in the value of digital currency.
- The most popular, Bitcoin, has risen from a value of $1,000 in early 2017 to $5,000 over the past couple of months
- Owners of Bitcoins and other forms of digital currency could be facing an unpleasant surprise at tax time
Should You Hire a Tax Lawyer?
Speaking to a tax lawyer now about your digital currency or any other tax concerns can mean avoiding costly lawsuits and lengthy debates with the IRS later on. Even a slight mistake when dealing with the IRS can cost you time, money, and it can even result in jail time.
The Scammahorn Law Firm is a Texas law firm with offices in Tyler and Dallas, Texas. We personally handle all areas of personal and business tax resolution including payment plans, compromise, tax litigation, IRS tax levies and liens, and innocent spouse relief.
Our law firm is committed to providing unsurpassed tax representation for our clients, and we have saved our clients from paying out millions of dollars in tax liabilities.
If you are facing a tax problem, we welcome your call to the Scammahorn Law Firm, PC today, at (903) 595-1000.