IRS continues to remain silent on Bitcoin tax liability

Mike Flacy for DigitalTrends writes: Mentioned by the National Journal this week, anyone that’s curious how to report Bitcoin earnings on their 2013 tax filing this year has yet to receive substantial directions from the Internal Revenue Service. With tax filing expected to start on January 31, 2014, anyone that’s sold Bitcoin for U.S. dollars may have to wait until the IRS releases a declarative statement on the subject.

According to the Journal, the issue is related to how the Federal government will eventually classify Bitcoin. For instance, taxing it as a commodity would fall under the capital gains umbrella while taxing it as a currency would be a much higher tax rate, much like regular income.

In an emailed statement sent to the National Journal, IRS representatives state “The IRS is aware of the potential tax-compliance risks posed by virtual currencies. The IRS continues to study virtual currencies and intends to provide some guidance on the tax consequences of virtual-currency transactions.” IRS representatives did not indicate when the government agency will release a statement regarding Bitcoin or other virtual currencies that have grown in popularity in the past few years.