“The IRS is seemingly giving taxpayers a chance to amend returns,” DiMichael said.
Additional guidance tries to answer questions regarding the tax treatment of a cryptocurrency hard fork (when a single cryptocurrency splits) and for those who hold virtual currency as a capital asset. The IRS still has not provided guidance on a number of important cryptocurrency issues, according to Garry, such as types of airdrops (a means of distributing units of cryptocurrency to the distributed ledger addresses of multiple taxpayers).
Jim Mastracchio, partner resident in New York and Washington, D.C., at Eversheds Sutherland, expects increased enforcement -- and thinks taxpayers should err on the side of caution. “The IRS and the Financial Crimes Enforcement Network have also stated publicly … that a cryptocurrency is not an account that requires FBAR reporting,” he added, but “it’s best to list crypto as a foreign asset if held outside the U.S.”