Steer Clear of Bitcoin Regulation, GAO Tells IRS

Good advice

Federal auditors are recommending that the Internal Revenue Service not issue regulations for taxpayers on filing returns for the money earned through the exchange of virtual currencies, such as Bitcoins.

The tax agency has neither the money nor the time to craft compliance rules for the emerging market, according to a new report from the Government Accountability Office.

Bitcoins -- which are not government-backed -- can be traded for real products and services or traditional currency, including dollars.

GAO officials acknowledged the government might be missing out on tax revenue as a result of not publishing Bitcoin-specific rules, but it is unclear how much. "Given the uncertain extent of noncompliance with virtual currency transactions, formal guidance, such as regulations, may not be warranted," the auditors concluded.