The US Internal Revenue Service has been considering different approaches to digital currency taxation, a top government official has revealed. Speaking during a recent event, the government official stated that the IRS has been weighing the different trade-offs each model offers. Bloomberg Law reported that Erika Nijenhuis, who serves as the senior counsel at the Treasury Department’s tax policy office, was speaking at the OECD’s 2020 Global Blockchain Policy Forum.
The US IRS is considering different approaches to crypto taxation.
The Internal Revenue Service has been weighing the benefits of different approaches to cryptocurrency. The Treasury official revealed that the tax agency has been weighing the burden each approach will put on related parties such as exchanges and traders. She further stated, “there are trade-offs among all of them, and we are hard at work thinking about all of those issues.” Nijenhuis was also joined on the panel by the vice-president of tax at US exchange Coinbase, Lawrence Zlatkin. The panelist urged the tax agency to opt for the risk-focused approach.
“Collecting large amounts of aggregate data will put a huge burden on exchanges.”
Zlatkin argued that collecting large amounts of aggregate data will put a huge burden on exchanges but will offer little use to enforce tax laws. He noted, “You get tons of information, but more isn’t always better.” The other panelist was Lisa Zarlenga, a partner at Steptoe & Johnson LLP who also criticized the transactions reporting approach. According to him, this approach will leave a heavy burden on cryptocurrency users. Even if exchanges would have to report aggregate information to authorities, individual taxpayers will still have a lot of calculations to do, such as the total gains or losses on their digital currency holdings.