GAO Recommends Updates To IRS Virtual Currency Guidance

The Government Accountability Office ("GAO") made several recommendations to the IRS on guidance to improve compliance with virtual currency transaction reporting.

The GAO conducted a study examining (i) general knowledge of virtual currency tax compliance, (ii) how the IRS has mitigated virtual currency tax compliance risks and (iii) whether the IRS's guidance on virtual currency tax compliance satisfies taxpayer questions or whether more information is needed.

The GAO recommended that the IRS:

• update 2019 FAQs to make clear that the FAQs provide general information but are not intended to be authoritative, since they are not binding on the IRS;
• increase third-party reporting on taxable virtual currency transactions by either (i) clarifying current third-party reporting requirements or (ii) modifying regulations;