The Organization for Economic Co-operation and Development (OECD) plans to release international guidelines for crypto asset tax reporting next year.
According to a Nov. 26 report by legal news outlet Law360, OECD’s center for tax policy director Pascal Saint-Amans said that there is already broad agreement among relevant regulators that there is a need for an international crypto asset tax reporting standard.
He said that the timeline in which the organization expects to deliver the standard is “probably sometime in 2021.”
The heightened appetite to better tax cryptocurrencies has been quite clear for some time. As Modern Consensus reported in July 2018, tax enforcement authorities from the U.S., U.K., Australia, Canada, and Netherlands started coordinating and collaborating to combat crypto-powered tax evasion.
The standard that the OECD is working on should be closely reminiscent of the common reporting standard (CRS) that was adopted in 2014 to standardize the information regulators collected from traditional financial institutions and shared with each other to combat tax evasion. Saint-Amans said:
“Fundamentally, the idea is to have a standard which would be roughly equivalent to the CRS, if it is not the CRS.”
In a mid-October report, the OECD pointed out that cryptocurrencies’ tax evasion potential “had previously been explicitly mentioned in the communiqués of the G20 Finance Ministers’ meetings in March 3 and July 4, 2018.”
The document also explained that regulatory efforts thus far have largely focused on anti-money-laundering and terrorism funding related matters, with little work done so far to establish new tax standards that fit this new industry and fighting crypto-related tax evasion.
A much-needed change
The enforcement of a clear standard for cryptocurrency tax reporting is much needed in the industry, as the currently fractured ecosystem already led to many problems for the space.
As Modern Consensus recently reported, the current ways of reporting crypto-related activities are so diverse and ineffective that they led to the United States Internal Revenue Service sending cryptocurrency traders bills that they do not actually owe—with one trader reportedly receiving a $127,000 tax bill over an annual loss of $2,000. The reason behind this mistake was that some exchanges—including Coinbase—sent 1099-K forms listing all of its user’s trades to the IRS, which misinterpreted the value of all the trades as gross income.