According to Tuesday’s document, the U.S. Internal Revenue Service will consider whether to tax NFTs on par with other collectibles, such as stamps and works of art. This could impact those who have digital assets included in their retirement plan.
The U.S. tax authority has made the first step in a while to clarify how digital assets are treated tax-wise. This is in response to a gap that left some taxpayers unsure about their tax liability.
The IRS and Treasury “seek feedback regarding upcoming guidance regarding tax treatment of a Nonfungible Token (NFT), as a Collectible Under the Tax Law,” the statement stated. This would imply a less favorable treatment according to capital gains tax rules and have implications if the assets were acquired by individual retirement plans.
The IRS invites people to comment on its proposal by June 19 on issues such as whether an NFT is a work or not. The IRS says that any NFTs will be treated as their underlying asset, regardless of whether it’s an artifact or a jewel.
The IRS updated its instructions for tax filers in October to include NFTs and cryptocurrencies.
Learn more IRS Expands Key US Tax Language To Include NFTs