Crypto currency

US lawmaker introduces bill aimed at protecting ‘forked assets’ from IRS

Minnesota Rep. Tom Emmer has reintroduced a bill aimed at preventing the IRS from imposing penalties or fees on crypto taxpayers with forked assets.

In an announcement from Emmer on Monday, the congressperson from Minnesota said he had once again introduced the Safe Harbor for Taxpayers with Forked Assets bill in the United States House of Representatives. If passed in its current state, the bill would create a safe harbor for crypto holders with forked assets, allowing them to be nontaxable events. Further, these conditions would be continued until the Internal Revenue Service provides “clear and consistent guidance on how these transactions should be managed.”

“Just like every other federal agency, the IRS must keep up with the rapid pace of technology or risk losing American leadership in innovation,” said Emmer. “Taxpayers suffering from a lack of tax guidance are being unfairly punished for investing in an emerging technology. What has been issued by the IRS so far is not pragmatic and has not supported the technology nor those who engage with it.”

He added:

“We should be embracing emerging technologies and providing a clear regulatory system that allows innovation to flourish in the United States. A safe harbor will protect taxpayers until the IRS take steps to improve their guidance.”

The deadline for filing taxes in the United States was May 17, following an extension from the usual mid-April due date. Crypto users who HODL their assets in the U.S. often do not have to pay taxes on them, but typically anyone who transfers tokens, exchanges them for fiat or receives digital currency as the result of a fork will have to report such transactions to the IRS. According to Emmer, taxpayers who receive forked digital currency “may have no knowledge of this new tax burden.”

Emmer, a Republican, first introduced the bill in 2018, and again the following year, in a Democrat-led House of Representatives but with a Republican-led executive branch. On both occasions, the bill was referred to the House Committee on Ways and Means and no further action was taken. This would be the first time his bill would face both a House, Senate and presidency in which Democrats are in control.

The Safe Harbor for Taxpayers with Forked Assets bill has the support of Chamber of Digital Commerce, nonprofit crypto advocacy organization Coin Center, the Blockchain Association and Rep. Darren Soto, a Democrat representing Florida’s 9th district.