The United States Internal Revenue Service (IRS) has appointed two new crypto tax experts from the private sector to focus on digital assets.
The official tax filing season in the U. S. commenced on Jan. 29, after which the IRS repeatedly issued notices urging citizens to report all cryptocurrency and digital asset income, including nonfungible tokens (NFTs). As shown below, crypto received in the form of rewards or via staking, among other areas, must be reported.
The two new IRS recruits, Sulolit Mukherjee and Seth Wilks, have been hired as executive advisers to the department, according to the IRS. It added:
IRS Commissioner Danny Werfel believes that expertise from the private sector can help the department successfully build a digital assets infrastructure “in a way that works well for everyone.”
The IRS will use the Inflation Reduction Act (IRA) funding — a federal law aimed at curbing inflation — to build compliance in emerging areas, including digital assets.
It is important to note that taxpayers in the U. S. are not required to report cryptocurrencies that are being held in wallets, transferred between two wallets owned by the same person or purchased using fiat currency.
Related: A taxing obligation: Is crypto reporting ‘impossible’ under US law?
Right before the start of the tax season, on Jan. 17, the IRS backtracked on the law requiring U. S. businesses to report all cryptocurrency transactions above $10,000. The department plans to implement the rule after releasing a regulatory framework.
The short-lived law, which was established law on Jan. 1, mandated required all U. S. businesses, such as brokers, to immediately report cryptocurrency transactions over $10,000. The IRS stated:
The U. S. House Financial Services Committee also noted several underlying problems with the “poorly constructed digital asset reporting requirements” that were passed on Jan. 1.