recommended reading

Auditors and IRS Pan Tax Regulations for Bitcoins

Flickr user zcopley

Federal auditors are recommending that the Internal Revenue Service not issue regulations for taxpayers on filing returns for the money earned through the exchange of virtual currencies, such as Bitcoins. 

The tax agency has neither the money nor the time to craft compliance rules for the emerging market, according to a new report from the Government Accountability Office.

Bitcoins -- which are not government-backed -- can be traded for real products and services or traditional currency, including dollars. 

GAO officials acknowledged the government might be missing out on tax revenue as a result of not publishing Bitcoin-specific rules, but it is unclear how much. “Given the uncertain extent of noncompliance with virtual currency transactions, formal guidance, such as regulations, may not be warranted," the auditors concluded. 

The tax agency has not provided taxpayers with information on virtual currencies “because of other priorities, resource constraints, and the need to consider the use of these recently-developed currencies," GAO officials explained.

Instead, for the time being, the IRS has agreed to post information on its websites linking to existing guidelines on bartering, gambling and hobby income, agency officials wrote in a May 3 letter responding to a draft report.

Steven Miller, IRS deputy commissioner for services and enforcement, stated: The IRS "is aware of the potential tax compliance risks posed by off-shore and anonymous electronic payment systems, and we are working to address these risks.”

Discussions with other federal agencies, new training for IRS professionals, and the creation of questionnaires for agents examining returns are under way, Miller added. 

Bitcoin trades, which are hard to trace online, have come under scrutiny at other regulatory agencies, such as the Financial Crimes Enforcement Network, which looks for signs of money-laundering. 

(Image via Flickr user zcopley)

Threatwatch Alert

Network intrusion

Florida’s Concealed Carry Permit Holders Names Exposed

See threatwatch report

JOIN THE DISCUSSION

Close [ x ] More from Nextgov
 
 

Thank you for subscribing to newsletters from Nextgov.com.
We think these reports might interest you:

  • Modernizing IT for Mission Success

    Surveying Federal and Defense Leaders on Priorities and Challenges at the Tactical Edge

    Download
  • Communicating Innovation in Federal Government

    Federal Government spending on ‘obsolete technology’ continues to increase. Supporting the twin pillars of improved digital service delivery for citizens on the one hand, and the increasingly optimized and flexible working practices for federal employees on the other, are neither easy nor inexpensive tasks. This whitepaper explores how federal agencies can leverage the value of existing agency technology assets while offering IT leaders the ability to implement the kind of employee productivity, citizen service improvements and security demanded by federal oversight.

    Download
  • Effective Ransomware Response

    This whitepaper provides an overview and understanding of ransomware and how to successfully combat it.

    Download
  • Forecasting Cloud's Future

    Conversations with Federal, State, and Local Technology Leaders on Cloud-Driven Digital Transformation

    Download
  • IT Transformation Trends: Flash Storage as a Strategic IT Asset

    MIT Technology Review: Flash Storage As a Strategic IT Asset For the first time in decades, IT leaders now consider all-flash storage as a strategic IT asset. IT has become a new operating model that enables self-service with high performance, density and resiliency. It also offers the self-service agility of the public cloud combined with the security, performance, and cost-effectiveness of a private cloud. Download this MIT Technology Review paper to learn more about how all-flash storage is transforming the data center.

    Download

When you download a report, your information may be shared with the underwriters of that document.