On my first day here I made a post about the tax implications of being on Steemit.

As a result of that post, @dana-edwards and I got into a long conversation about those tax implications. In the end, we agreed that although there is a ton of room for debate on what the tax implications of Steemit activity are exactly, there was something very straight forward about Steemit that would be helpful to have changed.

The fiat currency equivalent values all over the platform should be removed and replaced with values in Steem, Steem Dollars and Steem Power.

I told @dana-edwards I would draft a community letter and submit it for edits and opinions. If there is a consensus on this issue after reading the letter, than we could submit it officially in the hopes of making this change.

In the meantime I plan on having zero issues with taxes, so when my first post is vests in about 2 days - you better believe I'm going to be writing down the details.

Read the letter and leave comments or edits in the comment section

Edit 2 - One user pointed out that Steemit has no admin to address this letter to. Nonetheless, someone built the UI and presumably someone can change it. Who is that person?

Edit 3 - I understand that there are a number of people who see preparing for, or even agreeing, to pay taxes on Steem as anathema to the idea of Steem and virtual currency in the first place. I'll make a seperate post on that matter at some point, but for now let me just say this: Whether you believe in the validity of the of the IRS and its taxation power or not, at the end of the day they will come knocking for their money. This is just a means of A) preparing to argue how/what money should be paid and B) making it easier to pay when/if we are required to. And make no mistake, the IRS can require payment, whether you believe in it or not.

Edit 4: One CPA/Tax Attorney has already commented on the letter, and based on that comment it appears that removing currency equivalency might be a bad idea and the die may already be cast on steem as income notion. Looking for other attorneys/CPAs to chime in.

Edit 5: @samupaha makes a great point in the comments which I hadn't considered- if steem dollars don't hold to their peg of the dollar - which they have not - then many of these posts are going to be even more complicated to measure the tax basis on. Perhaps the removal of steem dollars should also be requested?

Edit 8: OK, so here are my thoughts - It seems - based on @sean-kings comment here, some of the content @dana-edwards post here, that there really isn't any question about whether steem is income. It seems like fighting that battle would be fruitless.

I don't know enough about the issue @samupaha raised about getting rid of steem dollars to come to conclusion about it one way or another, however in @samupaha's post here he argues for exactly that result and apparently @ned resteemed it. So this is already on the radar to some degree and I think it muddies the waters here.

The one thing that at least now a couple of CPAs seem not to totally disagree with is the notion that there should be better historical recording of Fair market value for tax basis purposes. This information is readily available on the block chain and adding a tax basis log would achieve this goal very well. With this in mind, I'm going to reedit the letter to ask for that exclusively. Thoughts?

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Edit 6: Dear @ned

# Edit 7 - Possible Requests:

We are writing this joint letter in order to request that a simple UI addition be created - a tax basis log - which would collect in one place a users vested posts/comments along with the tax basis of those posts in fiat currency and the time/day those posts vested. We are also adding that the log include an "export:csv" feature.

1. That all references to the "cash value" of Steem, Steem Dollars and Steem Power be removed from the Steemit UI and replaced with their actual value in Steem, Steem Dollars and Steem Power. (Perhaps not a good idea)
1. That the steem dollar be eliminated from the blockchain as it has long since stopped pegging to the dollar and in calculating taxes will simply amount to a confusion multiplier

## We are making this request because the current system misrepresents, in a way detrimental to the Steemit community, the value and ease of conversion of Steem into a fiat currency.

Currently, the IRS's position on the taxation of cryptocurrency is fairly clear. The IRS has so far released two notices which address the cryptocurrency issue.

In Notice IR-2014-36, the IRS makes clear that virtual currency is treated as property for tax purposes. If you purchase virtual currency, the tax basis would be the price you paid for it, and you would eventually be taxed on any profits from the sale of the currency.

However, in IR-2014-36 the IRS also indicates that virtual currency received as a payment to an independent contractor is taxable at self-employment rates.

In the accompanying notice, 2014-21, the IRS defines "convertible" virtual currency as "currency that has an equivalent value in real currency, or that acts as a substitute for real currency."

The IRS goes on to state the following:

A taxpayer who receives virtual currency as payment for goods or services
must, in computing gross income, include the fair market value of the virtual currency,
measured in U.S. dollars, as of the date that the virtual currency was received

Receiving a virtual currency from mining it is also taxed as income for the tax year within which it was mined:

when a taxpayer successfully “mines” virtual currency, the fair market value
of the virtual currency as of the date of receipt is includible in gross income

The implications of these notices are very serious.

If taken at face value, This notice requires every steemit account holder to keep a meticulous record of their vesting Steem income, on every single post and comment, as of the 7 day mark when that Steem incomes vests to them.

Needless to say, the IRS has not formulated a complete or final position on virtual currency, and has been asking for comment since 2014. As a result, there are many elements of this notice which bring into question its relevance to Steem, including:

* Steemit members are not mining the block chain directly.
* Steemit members are not providing compensation directly, but rather expressing their opinions about certain content, which then results in automated dispersals of Steem from the blockchain.
* Steem, as a currency, is not directly convertible into USD. Currently it requires a minimum of two currency conversions to turn Steem in USD, as well as a significant degree of technical competency.
* Steem value in USD is humongously volatile and to try and treat it as income with a basis at the moment of receipt would make accurate reporting incredibly difficult.

# Which brings us back to our initial request.
## By representing steemit posts and comment values in USD or other fiat currencies, the Steemit administrators further confuse the issue of whether Steem should be considered taxable income upon receipt within Steemit itself and before the Steem is converted to bitcoin or USD.

When a layman, or ill-informed tax official, visits the Steemit website, they would rationally believe, based on the representations of the post and comment values, that Steem is undeniably a simple "convertible" currency.

The presence of a dollar value beneath each post, or a dollar value beside each account name, makes it appear that Steem is not only worth a set and consistent amount of USD, but that it is as simple to access as dropping your bank card in an ATM. This is not the case.

By flouting the fiat currency conversion rate at every opportunity, the Steemit administration risks burdening the Steemit community with a tax reporting burden of monumental proportions.

This turns every steemit user, essentially, into the sole proprietor of the "business" that is their steemit account.

This means keeping the kinds of records business owners keep - namely a ledger or receipts on every "transaction" as posts and comments vest after seven days.

### Make no mistake about it, the IRS COULD impose such a restriction, and indeed one day might do so in a way which, unlike the current notice, is unambiguous.

But by including equivalent currency values everywhere on the Steemit platform, the Steemit administration is hastening the arrival of such a ruling.

# Edit 1
## Concurrently,

Our request is straightforward: add a new feature to the Steemit UI which would make compliance with the IRS much easier.

All that would be required is a simple log maintained on each account indicating the date and time a post/comment vested, the USD value at the time of the vesting and a running total of vested values for each current taxable year. An "export:csv" component would simply allow us to print out and email that information as easily as possible and would also not be a difficult addition.

This small addition would substantially assist American Steemit users to comply with the US Tax code. It would also be easily transferable to other fiat currencies if and when those governments require such information.

# Edit 8 Possible addition:
# Finally, we request that the steem dollar be removed from the block chain. Having long since failed to peg successfully to the dollar it will serve only as a source of additional confusion in calculating future tax burdens.

To summarize once again: We, the Steemit community, request :

1. That all references to the "cash value" of Steem, Steem Dollars and Steem Power be removed from the Steemit UI and replaced with their actual value in Steem, Steem Dollars and Steem Power. (Perhaps not a good idea)

1. That a simple UI addition be created - a tax basis log - which would collect in one place a users vested posts/comments along with the tax basis of those posts in fiat currency. (seems to be a straight forward good idea)

1. That the steem dollar be eliminated from the blockchain as it has long since stopped pegging to the dollar and in calculating taxes will simply amount to a confusion multiplier (perhaps a good idea?)

This change to the Steemit UI is absolutely central to the community's future success. As the community grows, governments will take an increased interest in the tax ramifications of Steemit. The simple addition we are requesting will ensure the community and its members are able to adapt and/or comply with those regulations.

Sincerely Yours,

Members of Steemit.