The IRS is Catching Flack Again for Weak Bitcoin Guidance (This Time on IRAs)

egg, smash

US citizens who invest retirement money in bitcoin or other digital currencies could face unforeseen tax consequences as a result of IRS policies, a government report released this week argued.

Originally prepared in early December, the Government Accountability Office (GAO) published a report on Monday in which it argued that the IRS needs to do more to inform taxpayers about the potential liabilities they face when investing their individual retirement accounts (IRAs) in blockchain-based assets.

As the report states, US law offers a broad degree of leeway when it comes to the types of assets that people can invest in as part of an IRAs (ranging from precious metals to real estate). That said, IRS guidance as it exists today creates the risk that taxpayers may not be entirely aware of tax liabilities (or penalties) that may arise from these investments, the GAO argued.

The report’s authors note:

“Retirement accounts allowing such unconventional investments increase owners’ responsibilities in ways they may not understand – and mistakes can trigger taxes and penalties. Moreover, account custodians may prematurely close an account or let valueless assets and fraud go undetected because they did not accurately determine the

Read more ... source: CoinDesk

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