As bitcoin (and digital currency transactions in general) begin gaining traction once again, tax related questions are inevitable and the IRS is taking note of such. Audits of bitcoin holders have already been conducted by the IRS and this will most likely continue to grow. As with any new fintech innovation, regulatory changes will be necessary. Hopefully the IRS will post additional information on how bitcoin holders can maintain compliant with tax related issues.
Digital currency experts hope the IRS will exempt “de minimis” bitcoin transactions from onerous reporting, much as U.S. taxpayers don’t have to report small gains or losses on foreign currencies they use when they travel abroad. Robert Willens, a New York-based tax expert, thinks the IRS has the authority to allow such an exemption without approval by Congress, but “it will be hard to design an exception that’s workable and can’t be abused.”