Edmund C. Moy, who served at the 38th Director of the United States Mint, has publicly shared his thoughts on the bitcoin tax guidance released by the Internal Revenue Service this week.
In a blog post from Friday morning, Moy said that “the guidance issued provides much needed clarity but is a big speed bump in the nascent crypto currency’s quest to become mainstream,” but added that “as bitcoin’s use becomes more widely accepted, the government may reconsider.”
In the tax guidance, the Internal Revenue Service stated that bitcoin should be treated as property, not as currency. Users of the digital currency will be required to keep track of losses and gains on transactions that exceed $600 in value (or any wages, salaries, rents, annuities, and more), which in the view of many is an inconvenience.
The bad news is that the IRS ruling is an obstacle to bitcoin’s growth as a currency. Complying with the IRS now means a lot of paperwork keeping track of all of a person’s transactions, even common everyday purchases (though I’m sure someone will eventually develop an app for this). Then for each transaction, a person has to figure out what the value of the bitcoin used when first acquired and subtract it from that day’s value of that bitcoin, can keep track of the capital gains or losses for the person’s individual tax return.
Moy sees this as an obstacle, as many in the community do:
This will have a near term chilling effect on bitcoin’s use for retail purchases. Buying your morning latte is now a taxable event. However, I’m sure someone will eventually write an app to make the paperwork easy.
The conversation from notable entities like Moy is an important step to getting the IRS guidance amended appropriately. On the matter, Moy says:
The IRS made this ruling because it has the legal authority to do so. But rules are not laws and therefore can be changed as circumstances dictate and as long as they do not contradict the law. Wider acceptance of bitcoin, in spite of this speed bump, is one such circumstance that may force the IRS to reconsider its guidance.
This isn’t the first time Mr. Moy has made comments on this topic. In early January, he wrote an opinion piece for Money News which suggested that a Chinese ban on bitcoin would validate cryptocurrencies (it should be noted that his piece was published during a time when rumors were circulating that the People’s Bank of China would ban bitcoin and other digital currency).