Still waiting on crypto

Delivered every Monday by 10 a.m., Weekly Tax examines the latest news in tax politics and policy.

May 01, 2023 View in browser   By Toby Eckert It’s been a while since we heard from the IRS on cryptocurrency. And it may be a while longer. The IRS hopes to release some new guidance “in 12-ish months,” an agency official said at the crypto confab Consensus 2023 last week, according to the trade publication CoinDesk. The issue is pressing, considering that the IRS brass has said that cryptocurrency is contributing a good bit to the U.S.’s massive tax gap — the difference between what it’s owed and what it’s actually paid. But it’s also very complex and controversial. People in the crypto world and some lawmakers have long complained that the IRS has provided very little clarity over tax rules for the industry and virtual currency holders. In 2021, Congress passed legislation requiring cryptocurrency brokers to report transactions involving digital assets to the IRS starting in 2023, much like brokers have to report purchases and sales of stock and securities. Companies would have to start some tracking and reporting of crypto sales. New laws also subject digital assets to basis reporting, which would allow the IRS to determine how much taxpayers made on a crypto trade and therefore owe in taxes. But the IRS said in late 2022 that implementation of all those laws would be delayed until it publishes proposed regulations and solicits comments. It didn’t provide a timeline. WE'LL PICK UP THAT THREAD BELOW, but first some housekeeping. Welcome to the working week. As Elvis Costello put it, "You gotta do it till you're through it, so you better get to it." Make our week a little easier by sending us some tips. Email: bfaler@politico.com, bguggenheim@politico.com and teckert@politico.com. Or Twitter: @tobyeckert, @brian_faler, @ben_guggenheim, @POLITICOPro and @Morning_Tax. Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories.   GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGSITER HERE.     The presence of Julie Foerster, the IRS project director for digital assets, at Consensus 2023 appeared to be something of a listening and get-to-know-you session. "We are engaging with you all so we get it right and build a plan," she said, according to Coinbase. She “highlighted that the landscape for digital assets is an evolving one, and emphasized a need to increase communications between the agency and the crypto community.” Foerster also said the IRS “needs to look at the skills of the people we have today and those we will bring on in the future,” CoinBase reported. “We need to have the right tools and the right people." The strategic plan the IRS released last month for its $80 billion in new funding includes hiring more experts to deal with digital assets and developing “New analytics-enabled capabilities … to support digital asset compliance, a “milestone” it set for fiscal year 2024. It also plans to have its “Information Returns platform enhanced to support digital asset reporting” during FY 2024. AI REPORT CARD: There’s been plenty of chatter lately about how artificial intelligence might affect the tax world, for good or ill. As our Benjamin Guggenheim reported in this space last month, one expert found that the buzzy bot ChatGPT did a pretty good job when asked to cook up tax scams. On the flipside, the IRS is using AI to catch tax cheats and improve customer service. It’s the same in the accounting industry — some see it as a threat to their livelihood, others as a powerful tool they can put to work. (Even ChatGPT has its own opinion about that, according to Accounting Today.) Now, Brigham Young University is out with a report measuring how well ChatGPT would do on accounting exams. The massive, crowd-sourced project involved 186 universities in 14 countries, which contributed a total of 25,181 exam questions and 2,268 textbook test questions. Comparing the bot’s performance to that of human students, the researchers found the students won, hands down, with an overall average score of 76.7% compared to 47.4% for ChatGPT. Among the bot's worst subjects: taxes. “On 11.3% of questions, ChatGPT scored higher than the student average, doing particularly well on AIS and auditing. But the AI bot did worse on tax, financial, and managerial assessments, possibly because ChatGPT struggled with the mathematical processes required for the latter type,” a summary of the study said. One caveat: The researchers used the original version of ChatGPT, not the newest product, GPT-4. The report's authors "fully expect GPT-4 to improve exponentially on the accounting questions posed in their study” and the issues the bot stumbled over, according to the summary. “What they find most promising is how the chatbot can help improve teaching and learning, including the ability to design and test assignments, or perhaps be used for drafting portions of a project.” Around the World Wall Street Journal: Americans Along Canadian Border Fume Over Ottawa's Housing Tax The Guardian: King Charles urged to push for breakup of UK’s ‘network of satellite tax havens’ Reuters: Brazil's Lula pledges new minimum wage policy, expanded tax exemption Bitcoin: Report: Kenya to Start Levying Tax on Revenue Earned by Crypto Exchanges Around the Nation The Oregonian: Oregon dreams of semiconductor factories, but land and tax breaks are going to data centers instead WPDH: New York State Sets the Highest Cigarette Tax in the Country Portland Press Herald: Maine cities, towns face historic tax increases as costs rise relentlessly Hawaii News Now: ‘We’re just elated’: Anti-vaping advocates win nine-year battle to tax vape products similar to tobacco Also Worth Your Time Accounting Today: A better tax season for just about everyone Did you know? HAL 9000, the mutinous AI computer in "2001: A Space Odyssey," was built at the fictitious HAL Laboratories in Urbana, Ill. The reference was inspired by the very real Coordinated Science Laboratory at the University of Illinois, where some of the first supercomputers were built.   DON’T MISS THE POLITICO ENERGY SUMMIT: A new world energy order is emerging and America’s place in it is at a critical juncture. Join POLITICO on Thursday, May 18 for our first-ever energy summit to explore how the U.S. is positioning itself in a complicated energy future. We’ll explore progress on infrastructure and climate funding dedicated to building a renewable energy economy, Biden’s environmental justice proposals, and so much more. REGISTER HERE.       Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler Benjamin Guggenheim @ben_guggenheim   Follow us

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings This email was sent to edwardlorilla1986.paxforex@blogger.com by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA Please click here and follow the steps to unsubscribe.