According to a July 9 press release, U.S Congressman, Tom Emmer has moved to reintroduce his bill dubbed “Safe Harbor for Taxpayers with Forked Assets,” following what he described as 'inaction' from the U.S Internal Revenue Service (IRS).
The bill focuses on providing a safe harbor for individuals who hold cryptocurrencies whose blockchain undergo a hardfork.
For the basics, a hardfork is the split of a blockchain into two ledgers, resulting in the creation of a new cryptocurrency.
In most cases, including the November Bitcoin Cash hardfork, a holder of the original cryptocurrency that was split, ends up having two cryptocurrencies with differing values, that are often lower than the initial price of the coins held before the hardfork.
It is for these type of individuals that Rep. Tom Emmer’s new bill provides a cover. If the piece is passed into law, it would mean that the U.S Internal Revenue Service cannot impose any tax penalties against such individuals since there is no legislative guidance regarding how they can report profits and losses regarding these forked cryptocurrencies.
In this regard, the bill aims to continue providing holders of hardforked cryptocurrency with this figurative ‘safe harbor’ until the IRS provides guidance on how to file the tax reports.
Tom Emmer as mentioned earlier also acknowledged in the press release, that the reintroduction of the bill is as a result of the IRS not issuing the guidance despite saying on May 30, that they would publish it “very soon.”
“More than 30 days later, no guidance has been issued,” Rep. Emmer wrote.
By and large, the issue of crypto tax reporting in the U.S remains a significant challenge for crypto holders as well as the IRS. While the IRS complains of crypto users underreporting taxes, these individuals cite a lack of guidance as the reason for the tax irregularities.