On September 21, 2016, the Treasury Inspector General for Tax Administration (TIGTA) released its report on the IRS on how they have dealt with digital currencies (virtual currencies).

The report can be found here:

The purpose of the report was to evaluate the IRS's strategy on digital currencies, such as Bitcoin, but also the other 250 active currencies.

Despite the IRS notice to taxpayers in 2014, providing guidance on the tax treatment of digital currencies, TIGTA found that the IRS has done nothing else to improve consistency or its strategy on how it handles the tax noncompliance. In addition, the Criminal Investigation had not investigated any taxpayers for tax dodging.

Also, even though the IRS had asked for public feedback on its own 2014 notice, it not acted on any information, despite TIGTA finding it contained useful information. In fact, the IRS actually stated they would not be acting on this feedback.

The IRS has agreed with the major findings and that it needs better guidance on documenting on digital currency transactions, for instance, around capital gains. They have committed to prouce better taxpayer guidance by end Dec 2016, and implement internal strategy recommendations by end of Sep 2017.



Calculating capital gains and taxes for Bitcoin and other crypto-currencies

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