In response to the IRS announcing how they will treat Bitcoin and virtual currencies for tax purposes a petition to the White House, has been started to get it amended. This is Due to the overly burdensome way miners would have to keep track of earnings and unclear procedures for doing so.
The petition has just been started, so it needs lots of signatures to get looked at by the White House and taken seriously.
Here is what the petition states.
WE PETITION THE OBAMA ADMINISTRATION TO:
AMEND IRS NOTICE 2014-2Taxing virtual currency/bitcoin as property stifles new technology & creates untenable requirements
The IRS Tax Notice 2014-21 clarifies the treatment of Virtual Currencies("VC") such as Bitcoin. The guidance states that digital currencies are to be treated as property. Thus, Capitals Gains must be paid on every transaction. This treatment of VC is overly burdensome as it will create onerous record keeping issues and unnecessary costs that will stifle the development and advancement of this important technology. Bitcoin is regularly used to pay for items and services, as it is a safe way to transfer payment. Under this interpretation, when Bitcoin is spent, the owner will have the tenuous responsibility of calculating their capital gains or losses, as well as the Seller of the goods or services. We ask that the IRS creates a new classification for VC's that removes these challenges.
Created: Mar 28, 2014
Especially for miners the IRS's vague requirements make it extremely difficult to follow. Tracking each transaction which for even a small scale miners can be in the 1000's per month, keeping track of each one individually would be a monumental task. There is also no guidance as to where you would get the official rates at the time of the transaction. There are several worldwide markers for Bitcoin value and all very in what they report at any given time..
I signed the petition I hope all of you get out and do so, as well.
While recognition and regulation may be wanted and needed for crypto currencies, overly vague and burdensome it does not need to be. This action by the IRS will stifle the growth and innovation in Bitcoin, in the US and does not need to happen.
A clear and non-burdensome way to track mining earnings and BTC earning is fine. The way the IRS put out these guidelines shows a lack of understanding in how Bitcoin works. If they had a better understanding, the guidelines would have reflected that and been understandable and easily executed. We can hope that this petition gets enough traction and it gets changed to not only make sense but have a workable way to go forward without being in violation of the IRS tax code.