The IRS doesn’t know how to tax Bitcoin

Bitcoin users want to pay their taxes come April, but the Internal Revenue Service (IRS) won’t tell them how. The agency needs time to study the issue, it told the National Journal in a statement, before it can give guidance on how taxpayers should treat the virtual currency.

“The IRS is aware of the potential tax-compliance risks posed by virtual currencies,” the agency’s statement said. “The IRS continues to study virtual currencies and intends to provide some guidance on the tax consequences of virtual-currency transactions.”

It’s unclear how Americans are supposed to report the money they hold in Bitcoin. The key is whether Bitcoin will be treated as a currency, commodity, or asset. It took the IRS almost seven years to publish standards on how to report gold, which is now treated as an asset. But now that Bitcoin is accepted by some major retailers including Overstock.com and hotels in Las Vegas, the currency’s legal status is more pressing than ever.