Government Reports, Advisories, Hearings, Etc.

State Information

  • ​Arizona HB 2417 (Chapter 97; 3/29/17) - Per the Senate Fact Sheet, "establishes guidelines for blockchain technology regarding electronic signatures and records." Also allows for "smart contracts."  Defines "blockchain technology" as "distributed ledger technology that uses a distributed, decentralized, shared and replicated ledger, which may be public or private, permissioned or permissionless, or driven by tokenized crypto economics or tokenless. The data on the ledger is protected with cryptography, is immutable and auditable and provides an uncensored truth." Defines "smart contract" as "an event-driven program, with state, that runs on a distributed, decentralized, shared and replicated ledger and that can take custody over and instruct transfer of assets on that ledger."
  • California Executive Order N-9-22 (5/4/22) - Promote and regulate blockchain, crypto assets and Web3.0 [press release]
  • California BOE Special Notice L-382 (June 2014) - If use virtual currency to buy a taxable item, sales tax owed based on the sales price of the item purchased.
  • California Dept of Business Oversight, Advisory on virtual currencies, 4/30/14 - press release + text
  • California Dept of Financial Protection & Innovation - letters (8/11/21 and 9/2/21) finding Bitcoin ATM machines don't need a Money Transmission Act license for a few reasons including that the company doesn't hold virtual currency for customers and sells Bitcoin from its own inventory. Rules likely to vary among states and particular facts.
  • Colorado SB 18-086 (5/30/18) - Dept. of State must consider blockchain tech when accepting business licensing records and in distributing state data to other agencies.
  • Delaware Blockchain Initiative launched in May 2016 by Governor Markell to attract this technology to the state and explore "distributed ledger shares" to be authorized by Delaware corporations.
  • Florida court rules Bitcoin is not money - The State of Florida v Espinoza, F14-2923 (11th Judicial Circuit, 7/22/16) - see ruling in this 7/25/16 Miami Herald article. This is a money services business ruling, not a tax one. The court explained Bitcoin and stated: "This Court is not an expert in economics, however, it is very clear, even to someone with limited knowledge in the area, that Bitcoin has a long way to go before it is the equivalent of money. ... Bitcoins ... are not monetary instruments." Thus, the court found that rather than exchanging money, the person sold property.
  • Illinois Blockchain Initiative.
  • Illinois IT-21-0004 (8/31/21) Apportionment-Virtual Currency
  • Illinois SB0338 (Public Act 102-0288) - adding virtual currency to unclaimed property law
  • Kansas Notice 20-04, Sales Tax Requirements Concerning Digital Currency Under the Retailers' Sales and Compensating Tax Acts, 11/2/20
  • Kansas Office of the State Bank Commissioner Guidance Document MT 2014-01 (6/6/14) - in some cases, exchange might be considered money transmission
  • Michigan - Sales tax information in Treasury Dept's Nov. 2015 newsletter
  • Missouri LR 7411 (9/12/14) - no sales tax imposed when customers obtain bitcoin from ATM because the bitcoin is intangible.
  • Nevada - SB 398 (Chapter 391; 6/5/17) allow blockchain tech as electronic record of Uniform Electronic Transactions Act, prohibit local gov't from taxing or restricting use of blockchain.
  • New Jersey - TAM 2015-1 (4/2/15) updated 3/21/22
  • New York - sales and income tax treatment of virtual currency - TSB-M-14(5)C, (7)(I, (17)S (12/5/14)
  • New York Attorney General launches Virtual Markets Integrity Initiative (April 2018) described as "a fact-finding inquiry into the policies and practices of platforms used by consumers to trade virtual or “crypto” currencies like bitcoin and ether" to provide "the accountability and transparency in the virtual currency marketplace that investors and consumers deserve.”  Press release + survey sent to 13 platforms + final's 9/19/18 article on 8 surprising findings from the initiative.
  • New York Public Service Commission news release 7/12/18 - higher utility rate allowed for those involved with cryptocurrency mining or providing the computer capacity for it.
  • New York State, Dept of Financial Services​ and BitLicense Info
  • Ohiostarted taking bitcoin for tax payments around Nov. 2018, but the next treasurer stopped the practice (Coindesk, 2019)
  • Texas Dept of Banking, Supervisory Memorandum 1037 (4/3/14) - generally finds that exchanging virtual currency for sovereign currency is not a currency exchange under Texas law.
  • Vermont - several new laws and activities:
    • S 269 (Act. No. 205; 5/30/18) on blockchain business development, including creation of blockchain-based LLCs and a study on possible use of blockchain for government records.
    • Center for Legal Innovation at Vermont Law School, Financial Tech Report for legislature, 12/7/17
    • H. 182 (Act 22; 5/4/17) on rules for money transmitters including virtual currency.
  • Washington Department of Revenue - Interim Statement Regarding Bitcoin: Payments, Mining, and Investment Income, 8/20/19
  • Wyoming, SF 111, Chapter 45 (3/10/18) - virtual currency is not subject to personal property tax.
  • Wyoming, SF 0038, Chapter 162 (4/21/21), Decentralized autonomous organizations (DAOs) - allow for formation of DAOs as LLCs. Bill summary includes: "A decentralized autonomous organization (DAO) is a limited liability company with special provisions allowing the company to be algorithmically run or managed (in whole or in part) through smart contracts executed by computers."
    • FAQs from Wyoming Secretary of State

Virtual Currency & Blockchain Technology

Accounting Resources

U.S. Treasury FinCEN and Related Information

​The Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department has issued guidance on banking and other aspects of virtual currency.

CFTC holds that bitcoins are a commodity (9/17/15 ruling)  +  CFTC Bitcoin website

Remarks From Under Secretary of Terrorism and Financial Intelligence David S. Cohen on "Addressing the Illicit Finance Risks of Virtual Currency" 3/18/14

This webpage, maintained by Professor Annette Nellen, is intended to provide information and links about taxation of virtual currencies (aka cryptocurrency) in the U.S. and elsewhere, and non-tax information, including about blockchain (aka distributed ledger technology), government activities, crypto articles, and more. Please scroll through to see topics and links.

U.S. Income Taxation

In March 2014, the IRS issued Notice 2014-21 and Information Release IR-2014-36, on the income tax treatment of virtual, convertible currency, such as bitcoin. The IRS has ruled that virtual currency is treated as property, rather than currency for tax purposes. That means it needs to be valued when used (such as to buy goods or to compensate an employee or to acquire a different virtual currency) to determine tax consequences. For example, assume Jane purchased X bitcoins last year for $100. Today, she uses that X bitcoin amount to buy clothes worth $120. Jane has a $20 gain on this transaction. Assuming she is an investor or trader in bitcoin (rather than a dealer), this is a capital gain which is taxed at a lower rate for federal income tax purposes than other income such as wages (assuming it is a long-term gain). Jane must keep records to track the basis of all virtual currencies she purchases and identify which ones she uses when she buys something. Basically, Jane is bartering.  For more on the tax rules and issues, exchange rates, and other information, see the links below.

Exchange Rate Information 

These are samples, not an exhaustive list.

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Tax Reform - Modernizing Tax Systems,      Following Principles of Good Tax Policy ​

21st Century Taxation blog posts and presentations with links to information about taxation of virtual currencies 

Taxation and Regulation in Other Countries - Virtual Currencies, ICOs​, the Blockchain
Please note - this is not a complete list

Articles and Information about Virtual Currencies & Blockchain Technology

IRS Guidance and Government Reports on Taxation 

  • Rev. Rul. 2019-24 (10/9/19) on forks and airdrops (but not as clear as we need)
  • NYSBA comment letter on open tax issues (4/18/22) including whether VC is a commodity or security, application of §475, lending crypto, and proof of stake.
  • §1031 and virtual currency:
    • No longer a federal issue after 2017 per TCJA.
      • IRS limited guidance in 2021 - CCA 202124008 (6/18/21) - application of §1031 to specified virtual currencies including bitcoin [I don't agree with the bitcoin-litecoin conclusion of the IRS]
    • Still an issue in California - see this §1031 paper with suggestions for guidance from FTB
  • FAQs created on 10/9/19 on Notice 2014-21, Rev. Rul. 2019-24 and a few new topics (some of
    these present new rules and should really have been in proposed regs such as the suggestion
    that it is ok to use FIFO to track use of virtual currency).
  • 2021 IRS Form 1040 Page 1 - the question is modified from 2019 and 2020 to remove "send" and replace "acquire" with "dispose of."  That's quite a change. Issues from the 2020 instructions are still in the 2021 instructions (see below for more background on this question0.
  • 2020 IRS Form 1040 Page 1 - the 2019 Sch 1 question was moved to top of page 1 for 2020. The instructions (pages 15 - 16) provide a bit more info than for 2019 but leave many questions unanswered such as why the term "virtual currency" is used rather than "convertible virtual currency" on which IRS and FinCEN guidance is based, and whether gaming currency convertible to/from fiat warrants a "yes" answer. Note the broadness of the question that requires a "yes" answer for receipt of a virtual currency in any manner. The instructions also raise some puzzling questions. For example, they include: "Regardless of the label applied, if a particular asset has the characteristics of virtual currency, it will be treated as virtual currency for Federal income tax purposes." What does that mean? gaming currnency? certain gift cards? virtual sport trading cards?
    • 3/2/21 - IRS added FAQ 5 to say that if the only virtual currency transaction was the purchase of it, the 1040 answer is no.  Observation: This is odd since the question asks if "otherwise acquired."
  • 2019 IRS Schedule 1 includes a new question: "At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?"  The 1040 instructions (p 81) provide more information on this question including what is considered a transaction involving virtual currency. Note: Not all individuals are required to file this schedule. It appears though that if anyone has to answer "yes" they must file the schedule. The instructions do say that if the answer is "no" and you don't otherwise have to file Schedule 1, you can skip filing it.
        Lots of questions here - what if someone transfers a virtual currency from one wallet to another? What if there was a hard fork during the year that the taxpayer doesn't learn about until much later (which the IRS views as received once recorded on the distributed ledger (per Rev. Rul. 2019-24))?  What is an individual's partnership owns some and the partner doesn't know? What if you received some by gift and held onto it? Likely a good idea to attach a statement explaining why you check "yes" but don't have any virtual currency transaction noted on the return such as because  you received some by gift and held onto it rather than disposed of it.
        And just what does the IRS view as "virtual currency"? Between early October 2019 and February 12, 2020 the IRS broadly defined virtual currency to also include some gaming currency such as Roblox and V-bucks (click here for 10/12/19 version from the Wayback Machine).  After some attention on social media such as parents wondering if they need to answer "yes" because of gaming activities of their children, the IRS issued a "statement" on Feb 14, 2020 and changed the language on its Virtual Currency website. Per the statement, using virtual currency in a game that never leaves the game (not convertible) doesn't warrant a "yes" answer. But, some of the game currency does leave the game environment, so taxpayers need to check. See my blog post of 2/15/20 for issues I think exist with this broad definition and losing site of tax considerations. Also sounds like the IRS needs to say more as given their still broad definition of virtual currency, perhaps some gift cards or merchant point systems are a convertible virtual currency.
  • IRS CC 2020-003, Procedures for Coordination of Cases Involving Virtual Currency (10/22/19) - information for IRS attorneys working cases involving virtual currency and digital assets
  • Notice 2014-21 (3/25/14)
  • FinCEN and FBAR reporting - see Kirk Phillips, "Virtual currency not FBAR reportable (at 
    least for now)
    ," Journal of Accountancy, 6/19/19
  • IRS started sending letter to virtual currency owners to check their filings, IR-2019-132 (7/26/19). includes links to the 3 types of letters sent
  • IRS reminders on virtual currency reporting, IR-2018-18 (3/23/18)
  • IRS LB&I adds virtual currency as an examination campaign (7/2/18)
  • 21 members of Congress ask Comm's Rettig for more guidance (4/11/19)
    • Commissioner Rettig says more guidance is on its way (5/16/19)
  • Congressman Brady calls on IRS to issue more guidance (Sept. 2018)
  • IRS Webinar - Understanding the Basics of Virtual Currency (2018)
  • Kimmelman v Wayne Insurance Group, No. 18 CV 1041 (Ohio Ct Common pleas, 9/25/18) - K's filed claim for stolen bitcoin and insurance company awarded $200 for stolen cash claim. Court agreed with K's argument that it is property as labelled by the IRS in Notice 2014-21.
  • J5 - Global Tax Enforcement - On 7/2/18, the Joint Chiefs of the Global Tax Enforcement  announced a joint effort to "combat international tax crime and money laundering." This effort includes "fighting ... cybercrime through the use of cryptocurrencies." The J5 consists of criminal investigation units from Australia, Canada, Netherlands, UK and the U.S.
  • Example of IRS enforcement efforts - Dept. of Justice press release of 2/13/20 on finding person operating a darknet-based bitcoin mixer that laundered over $300 million for others.
  • IRSAC Report of Nov. 2018 includes recommendations on virtual currency and IRS
  • IRS National Taxpayer Advocate's 2013 Annual Report to Congress - Most Serious Problem #24 -The IRS Should Issue Guidance to Assist Users of Digital Currency (pages 249 - 255)
  • GAO, Virtual Economies and Currencies: Additional IRS Guidance Could Reduce Tax Compliance Risks (5/15/13)
  • OECD, BEPS Action 1, March 2014, see pages 15 - 16
  • IMF, Virtual Currencies and Beyond: Initial Considerations, Jan. 2016 + press release (1/20/16)
  • TIGTA press release (11/8/16) and report (9/21/16) pointing out that the IRS is not using its enforcement tools to "address virtual currency tax noncompliance." TIGTA also points out that while the IRS sought comments on where additional guidance needed (per Notice 2014-21), it has not issued any additional guidance.
  • 2021 - Summons on Circle Internet Financial Inc. + details
  • Court denies motion to quash IRS summons - Zietzke,  No. C19-1234-JCC (WD WA, 11/25/19); summons issued to Bitstamp and a user challenged it. Court did find that it was overly broad but otherwise valid.
  • 2016-2018 - IRS John Doe Summons – U.S. v. John Doe,  No. 3:16-cv-06658-JSC (ND CA 11/30/16) – The IRS filed a petition to obtain two years of records from Coinbase (2014 and 2015). The 16-page petition (11/17/16) explains how virtual currency works and what Coinbase does. It also provides an example the IRS Revenue Agent found that involved moving millions of virtual currency. The IRS believes that some of its customers have not complied with the tax laws. See Stan Higgins, “The IRS is Seeking Data on Coinbase’s Bitcoin Customers,” CoinDesk, 11/18/16. See 11/30/16 Dept. of Justice press release on the court's grant of permission to the IRS to serve the summons + 11/17/17 court order. In March 2017, the Department of Justice filed a petition asking Coinbase to show cause for not producing the records (also see No. 3:17-cv-01431-JSC (ND CA, 3/16/17)). This petition lays out concerns of the IRS including that in 2013 and 2014, it looks like only about 800-900 individual returns reported any gain or loss from bitcoin transactions. On 5/17/17, Senator Hatch and Congressman Brady sent a letter to the IRS questioning the scope and basis for the summons as it seems overly broad in asking for records of over 500,000 active users of Coinbase. On 7/18/19, the District Court granted Doe #4 the right to intervene upon showing that the IRS summons was broad in that the IRS likely doesn't need all records of the million+ Coinbase users (also see 7/25/17 blog post of Procedurally Taxing). Per a July 6, 2017 filing, the IRS agreed to only look at "accounts with at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013-15 period." Also see Coin Center's 8/3/17 amicus brief arguing that the IRS summons is too broad.  On 11/28/17, the final decision was issued by the court to require Coinbase to produce documents for accounts with at least the equivalent of $20,000 in any one transaction type (buy, sell, send, or receive) in any one year during the 2013 to 2015 period (Case 3:17-cv-01431-JSC) . Also see Feb. 2018 information from Coinbase to its customers.

Additional Resources on Tax Considerations

  • P.L. 117-58 (11/15/21) Infrastructure Investment and Jobs Act - adds digital reporting requirements for brokers and certain merchants. See track changes version of these provisions along with background and reg info.
  • H.R. 6582, Virtual Currency Tax Fairness Act of 2022 - exempts up to $200 of gain from personal transactions in virtual currency
  • H.R. 5083, Cryptocurrency Tax Reform Act (117th Congress) to expand definition of "broker" for §6045 reporting purposes to include "any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person". A "digital asset" is "Except as otherwise provided by the Secretary, the term ‘digital asset’ means any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the Secretary."
  • H.R. 3273, Safe Harbor for Taxpayers with Forked Assets Act of 2021 (117th Congress) - Adds IRC section 139I to exclude gross income from any forked convertible virtual currency until the IRS issues regulations on the tax treatment. modify §1031 to include exchange of virtual currency, and add §139I to exclude up to $600 of gain from the sale or exchange of virtual currency.
  • H.R. 1628, Token Taxonomy Act of 2021 (117th Congress) - various changes including to SEC rules. Tax changes include allowing virtual currency to be in an IRA account, 
  • H.R. 5635, Virtual Currency Tax Fairness Act of 2020 (116th Congress) - would add IRC §139F to exclude gain of $200 or less on transactions involving personal transactions involving virtual currency.
  • H.R. 3650 (116th Cong) and H.R. 6972 (115th Congress) on penalty relief while there is no guidance on tax treatment of hard-forked assets; more from sponsor Rep. Emmer, member of Congressional Blockchain Caucus
  • H.R. 3963 (116th Congress) to allow like-kind exchange treatment under IRC §1031 for virtual currency exchanged before 2025. 
  • Coinbase Crypto Tax Guide + Information on information reporting forms
  • Coin Center, A Duty to Answer: Six Basic Questions and Recommendations for ​the IRS on Crypto Taxes, April 2019.
  • Deloitte article on the bitcoin fork (2017)
  • PwC Tax Function of the Future - Blockchain and the Tax Function
  • ​Understanding virtual currency transactions: