Still waiting for crypto – POLITICO
It’s been a while since we heard from the tax authorities about cryptocurrency. And it could be a while longer.
The IRS hopes to issue some new guidance “in 12 months,” an agency official said at crypto confab Consensus 2023 last week, according to trade publication CoinDesk.
The issue is urgent, considering that IRS brass has said that cryptocurrency contributes a good deal to America’s huge tax gap — the difference between what it owes and what it actually pays. But it is also very complex and controversial.
People in the crypto world and some lawmakers have long complained that the IRS has provided very little clarity on tax rules for the industry and virtual currency holders.
In 2021, Congress passed legislation requiring cryptocurrency brokers to report transactions involving digital assets to the IRS beginning in 2023, much like brokers must report purchases and sales of stocks and securities. Businesses need to start tracking and reporting crypto sales.
New laws also subject digital assets to base reporting, which would allow tax authorities to determine how much taxpayers profited from a crypto trade and therefore owe in taxes.
But the IRS said in late 2022 that implementation of all those laws would be delayed until it publishes proposed regulations and solicits comments. It gave no timeline.
WE PICK UP THAT TOE BELOW, but first some housekeeping. Welcome to the working week. As Elvis Costello put it, “You gotta do it till you’re through it, so you better get to it.” Make our week a little easier by sending us some tips.
Email: [email protected], [email protected] and [email protected]. Or Twitter: @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax.
Would you like to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on today’s biggest stories.
The presence of Julie FoersterIRS Project Director for Digital Assets, at Consensus 2023 appeared to be something of a listen-and-get-to-know session.
“We’re all getting involved so we get it right and build a plan,” she said, according to Coinbase.
She “highlighted that the digital asset landscape is evolving, and emphasized the need to increase communication between the agency and the crypto community.”
Foerster also said the IRS “needs to look at the skills of the people we have today and those we will bring forward in the future,” CoinBase reported. “We have to have the right tools and the right people.”
The strategic plan the IRS released last month for its $80 billion in new funds includes hiring more experts to handle digital assets and developing “new analytics-enabled capabilities … to support digital asset compliance,” a “milestone” it set for the fiscal year 2024. It also plans to have its “Information Returns platform enhanced to support digital asset reporting” during FY 2024.
AI REPORT CARD: There has been a lot of talk lately about how artificial intelligence can affect the tax world, for better or for worse. As our Benjamin Guggenheim reported here last month, one expert found that the lively ChatGPT bot did a pretty good job when asked to create tax fraud. On the other hand, tax authorities are using AI to catch tax fraud and improve customer service.
It’s the same in the accounting industry — some see it as a threat to their livelihood, others as a powerful tool they can put to work. (Even ChatGPT has its own opinion on that, according to Accounting Today.)
Now Brigham Young University is out with a report measuring how well ChatGPT would do on accounting exams. The massive, crowd-based project involved 186 universities in 14 countries, which contributed a total of 25,181 exam questions and 2,268 textbook test questions.
Comparing the robot’s performance to human students, the researchers found that the students won hands down with an overall average score of 76.7% compared to 47.4% for ChatGPT. Among the fine’s worst subjects: taxes.
“On 11.3% of questions, ChatGPT scored higher than the student average, doing particularly well on AIS and auditing. But the AI bot did worse on tax, financial and management assessments, possibly because ChatGPT struggled with the mathematical processes required for the latter type, says a summary of the study.
One caveat: The researchers used the original version of ChatGPT, not the latest product, GPT-4.
The report’s authors “fully expect GPT-4 to improve exponentially on the accounting questions posed in their study” and the problems the robot stumbled upon, according to the summary. “What they find most promising is how the chatbot can help improve teaching and learning, including the ability to design and test assignments, or perhaps be used to prepare parts of a project.”
Wall Street Journal: Americans along the Canadian border fuming over Ottawa’s housing tax
The Guardian: King Charles urged to push to break up UK’s ‘network of satellite tax havens’
Reuters: Brazil’s Lula promises new minimum wage policy, extended tax exemptions
Bitcoin: Report: Kenya to start paying tax on income earned by crypto exchanges
The Oregonian: Oregon dreams of semiconductor factories, but land and tax breaks go to data centers instead
WPDH: New York State sets the highest cigarette tax in the country
Portland Press Herald: Maine towns, cities face historic tax hikes as costs rise relentlessly
Hawaii News Now: ‘We’re just elated’: Anti-vaping advocates win nine-year battle to tax vape products similar to tobacco
Accounting today: A better tax season for just about everyone
HAL 9000, the mythical AI computer in “2001: A Space Odyssey,” was built at the fictional HAL Laboratories in Urbana, Illinois. The reference was inspired by the real Coordinated Science Laboratory at the University of Illinois, where some of the first supercomputers were built.
