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IRS Seeks to Tax NFTs Like Other Collectibles
NFTs will be taxed like the underlying assets until final rules are agreed on how to treat digital proofs of ownership held in retirement accounts
Updated Mar 21, 2023, 9:27 p.m. Published Mar 21, 2023, 2:56 p.m.
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The U.S. Internal Revenue Service is considering whether to tax non-fungible tokens (NFT) on a par with other collectibles such as stamps, works of art and fine wine, in a move likely to have an impact on those including the digital assets within their retirement plan, according to a document published Tuesday.
The proposed guidance represents the first move by the U.S. tax authority in a while to clarify the tax treatment of digital assets, addressing a vacuum that has left some taxpayers guessing about their liability.
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The IRS and Treasury Department are "soliciting feedback for upcoming guidance regarding the tax treatment of a non-fungible token (NFT) as a collectible under the tax law," implying a less favorable treatment under capital gains tax rules, and with implications if the assets are acquired by individual retirement accounts, the statement said.
The IRS is looking for people to comment on the proposal by June 19, on issues such as when an NFT constitutes a work of art. In the meantime, the tax authority says it treat any NFTs like their underlying asset, whether that's an artwork or a gemstone.
In October the IRS expanded its instructions for those filing tax forms, to ensure it included NFTs as well as cryptocurrencies.
Read more: IRS Expands Key US Tax Language to Include NFTs
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