IRS need help with calculating crypto taxes

IRS need help with calculating crypto taxes

  • The US IRS recently sent an email to numerous crypto businesses, asking for help with tax calculations.
  • The agency is offering contracts for businesses that are willing to help calculate users' gains and losses.
  • So far, it remains unknown whether any firm has decided to accept the offer.

The United States Internal Revenue Service (IRS) is preparing to make another move towards taxing crypto. Due to the difficulties regarding crypto taxation, the IRS is allegedly emailing crypto startups. The agency is doing so with the intention of hiring third-party contractors who would help with tax calculations.

Crypto tax firm reveals the IRS’ request for help

The new information came in a blog post published yesterday, May 13th, by cryptotrader.tax. The post claims that the company was contacted by the US tax authority only day before, May 12th.

The IRS sent an email, alongside a Statement of Work. The email reveals that the IRS wants to hire outside contractors who would assist in calculating taxes made from crypto transactions.

The blog post also noted that the company does not plan on pursuing the contract, due to its dedication and loyalty towards its users.

What will the contractors have to do?

As for the job itself, the IRS states that it needs help to aggregate, value, and compute the crypto users’ losses and gains.

These transactions need to be aggregated, and the assets involved need to be valued, as part of the process of computing gains and losses. Additionally, specialized technology and infrastructure are required to digest, contain, and analyze virtual currency data due to unique requirements such as but not limited to decimal place precision, varying field formats, and file formats.

The task appears to be rather huge, and the agency’s move shows that tackling the entire US crypto sector alone falls outside of its capabilities.

This is also obvious from the part of the letter that says that the process of calculating gains and losses is sometimes simple. However, it adds that it can also be very complex, as transactions can get dispersed across numerous wallets and exchanges. There are hundreds of thousands of asset transactions per year to look through, which is too much work for any single entity.

As mentioned, the IRS also sent six pages long Statement of Work. The document says that the IRS also requires help with preparing the report, conducting data discrepancy analysis, resolving potential errors, and more. Not only that, but it also expects more from the firms who decide to pursue the contract.

They will have to help with trial preparations, and maybe even testify at trials, should their input proves necessary. The agency is certainly putting quite a task before its contractors, and it will be interesting to see how many of them will be willing to oblige.

By Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications. Raza is the co-founder of 5Gist.com, too, a site dedicated to educating people on 5G technology.

Investing is speculative. When investing your capital is at risk. This site is not intended for use in jurisdictions in which the trading or investments described are prohibited and should only be used by such persons and in such ways as are legally permitted. Your investment may not qualify for investor protection in your country or state of residence, so please conduct your own due diligence. This website is free for you to use but we may receive commission from the companies we feature on this site. Click here for more information.