Congress Slams IRS Over Bitcoin Tax Law; Here’s the Major Loophole for Crypto Investors

Tony "The Bull" Severino

6 years ago

3 mins read

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The United States tax deadline has came and went, and thanks to overwhelmingly confusing tax laws, crypto and Bitcoin investors are left scratching their heads, with many outright refusing to report their crypto earnings and losses on their annual tax filing.

It’s not U.S. taxpayers who are alone in feeling confused by the complex tax laws and lack of clear guidance. Congress has issued a scathing letter to the Internal Revenue Service (IRS) asking for clarity on how U.S. residents should go about paying their taxes on Bitcoin and other cryptocurrencies. The letter itself, suggests a leading tax attorney with experience in advising crypto clients, creates a major loophole for crypto investors who are at risk to become audited or worse.

Congress Issues Letter to IRS Requesting Bitcoin Tax Clarity

Tax day in the United States was this past Monday – a day many U.S. taxpayers dread. Tax laws in the country are already complicated, and confusing, requiring many taxpayers to either invest in software or pay a tax advisor to help guide them through the process and ensure all gains and losses are accurately reported.

The confusion is significantly amplified when you take into account an emerging asset class that is not fully understood, is unregulated, and has a multitude of potential use cases that walk the line of different classifications. Making matters worse, the IRS has only issued one public notice back in 2014 on how to pay taxes on cryptocurrencies such as Bitcoin since its inception, yet carries fines of up to $500,000 and up to five years in prison if taxes aren’t reported properly.

The glaring issue has prompted Congress to issue a letter to the IRS, demanding answers for U.S. taxpayers who are lost on how to report crypto-related transactions on their taxes.

“Taxpayers deserve clarity on several basic unanswered questions regarding federal taxation of these emerging exchanges of value,” the letter read. “Guidance is long overdue and essential to proper reporting of these emerging assets. The bipartisan support this letter has received should send a clear message to the IRS that clear guidelines for reporting virtual currency are necessary,” added Minnesota Congressman Tom Emmer.

Letter Inadvertently Provides Major Loophole for Crypto Investors

The letter itself Congress sent to the IRS, may further complicate things for the U.S. government, according to San Francisco-based tax lawyer Alex Kugelman who is familiar with advising cryptocurrency clients. Kugelman says that the letter could act as a sort of protection for any crypto investors that may have been targeted by the IRS’s crackdown on crypto tax evaders.

Kugelman explained that “if any of my clients are audited, I am going to present this to auditors – how can the IRS take enforcement action against taxpayers when there is such an obvious lack of guidance?”

With fines as steep as $500,000 and charges that could lead to up to five years in prison, having this added layer of protection on what is a complex and confusing situation, can be an ace up the sleeve for crypto investors or traders who find themselves in a precarious situation with the IRS.

Disclaimer: This information should not be taken as tax advice. Seek a certified public accountant for any crypto tax related questions.

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Tony "The Bull" Severino

Tony "The Bull" Severino, CMT, is a distinguished figure in the cryptocurrency analysis sector, renowned for his in-depth technical expertise and innovative approach to market trends. As the Head of Research at NewsBTC, Tony leads a team dedicated to providing cutting-edge insights and forecasts, helping both novice and experienced traders navigate the complexities of the crypto market.
A seasoned Chartered Market Technician, Tony's prowess in identifying and capitalizing on market patterns is unmatched. His academic and professional journey in market analysis has firmly established him as a leading authority in technical trading strategies. Tony’s approach is heavily influenced by the principles of Elliott Wave Theory, a method known for its rigorous assessment of investor psychology and price movements.

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In addition to his educational initiatives, Tony is a prolific author and a dominant voice in the crypto community. He writes the CoinChartist VIP newsletter, a weekly dispatch that has become a staple among crypto enthusiasts, revered for its insightful analysis and actionable trading advice. This newsletter has consistently ranked as a best-seller on SubStack, boasting thousands of subscribers who rely on Tony’s expertise to guide their trading strategies.

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Before his ascent in the financial analysis world, Tony honed his skills in journalism. His background in this field has endowed him with a unique ability to present intricate market dynamics in a clear and compelling manner, making his insights highly sought after by a broad audience that ranges from casual readers to professional traders.
His professional affiliations underscore his commitment to excellence and continuous learning. As a partner of Elliott Wave International and TradingView, Tony collaborates with other leading experts to enhance his knowledge and skills. His active membership in the CMT Association further aligns him with the highest standards of industry practices and ethics.

Tony’s nickname, "The Bull," aptly reflects his aggressive and optimistic outlook on the cryptocurrency markets. His forecasts often anticipate significant upturns, earning him a reputation for bullish predictions that have frequently led to lucrative outcomes for those who follow his advice.

In summary, Tony "The Bull" Severino, CMT, is more than just a technical analyst; he is a mentor, educator, and innovator whose influence in the cryptocurrency space continues to grow. His dedication to advancing the understanding of market forces and his commitment to providing high-quality, reliable analysis make him a pivotal figure in the world of cryptocurrency trading.