The U.S. Internal Revenue Service (IRS) has started collecting feedback from the public on whether NFTs should be taxed at the same rate as other collectibles under the tax law.
The tax authority said the comments can be submitted until June 19.
- The IRS will determine whether it would treat an NFT as a collectible while taxing by using a look-through analysis and release guidance on it accordingly.
- The analysis will collect opinions on issues such as whether an NFT is an artwork.
- Since
the deadline for feedback is June 19, the taxpayers who must report
their 2022 returns by April 18 will probably not have to go by the new
guidance.
- The agency will treat any NFT like an underlying asset until June 19.
- The proposal represents the IRS' first move to clarify the tax treatment of NFTs.
- Under
the U.S. tax law, any person who sells collectibles, such as artworks,
stamps, and fine wine, must pay a maximum capital gains tax rate of
28%.
- The proposed guidance aims to apply the same tax rate to an NFT verifying the ownership of a collectible.
- In
October, the IRS also proposed a law draft that requires NFTs and
cryptocurrencies to be reported under a separate section titled Digital
Assets for tax purposes.
