Emmer Continues Push for Clarity for Virtual Currency Taxpayers – Tom Emmer

Washington, D.C. – Today, Congressman Tom Emmer (MN-06) led a bipartisan letter with six of his colleagues on the Blockchain Caucus to the Internal Revenue Service (IRS) Commissioner Charles Rettig regarding guidance for taxpayers making cryptocurrency donations.

For capital gains purposes when making a charitable contribution, the IRS instructs taxpayers to quote the exchange rate of their cryptocurrency. For contributions of $5,000 or more in cryptocurrency, the IRS requires taxpayers to have the value of their cryptocurrency donation appraised by an “IRS appraiser,” despite the exchange rate for these assets being easily accessible and verifiable on public exchanges.  

“The current guidance by the IRS is, in many ways, arbitrary and in need of a correction. The market value of these cryptocurrencies is readily available on public bitcoin exchanges, so requiring an appraisal creates additional and unnecessary hurdles for those looking to donate to the charity of their choice via crypto,” said Emmer.

“In general, inconsistent regulation can and will have a chilling effect on the expanded use of digital currencies and financial technology in our society. In this case, the IRS’s guidance creates more problems than it solves,” Emmer concluded. 

“While the IRS’s guidance is reasonable, it hasn’t taken the necessary steps to make sure taxpayers can follow it. This should be an easy lift for the agency,” said Jerry Brito, Executive Director of Coin Center. 

“The Chamber of Digital Commerce is proud to support Congressman Emmer in his efforts to remove unnecessary hurdles for donors who want to contribute virtual currency for charitable causes. Congressman Emmer’s proposed solution will help clear the way for charitable organizations to receive donations from new donors and new payment methods and we appreciate his leadership in doing so,” said Amy Davine Kim, Chief Policy Officer, Chamber of Digital Commerce.

“As more charitable organizations choose to accept cryptocurrency donations, there is a great opportunity for the increasing number of Americans who hold crypto to give back to causes close to their hearts. Policymakers should work to make this process as seamless as possible so that more resources can get to those in need,” said Kristin Smith, Executive Director of the Blockchain Association.

Background:

Thus far, the IRS has offered conflicting methodology for evaluating cryptocurrency for tax purposes. Recently, the IRS updated their “Frequently Asked Questions on Virtual Currency Transactions” which allows taxpayers to provide evidence of fair market value at the time of sale or receipt by citing the exchange rate for the cryptocurrency. However, when determining the value of cryptocurrency donated for charitable purposes, if the donation exceeds $5,000 in crypto, the taxpayer needs to have the donation appraised by an IRS approved appraiser and is not given the option to cite the exchange rate at the time of the donation.

Currently, Form 8283, the Noncash Charitable Contributions form, does not allow the taxpayer to report the fair market value of their cryptocurrency by referencing the exchange price or price quoted in worldwide indices as described by the IRS FAQ. Instead, it directs the taxpayer to complete Section B, which requires that the taxpayer include a written, qualified appraisal to determine the value of the donated crypto.

To address this issue, Congressman Emmer has called on the IRS to amend Form 8283 to allow a taxpayer making a charitable contribution using a cryptocurrency to report the donation value under Section A as they would securities or other assets with readily available price indices. If the IRS is unable to amend Form 8283, under Section 170(f)(11)(H), due to lack of authority, Congressman Emmer has encouraged the IRS to prescribe regulations that provide that this requirement does not apply in the case of virtual currency donations $5,000 or greater.

 

Read Congressman Emmer’s letter here

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