The US Internal Revenue Service (IRS) is seeking feedback on the taxation of non-fungible tokens (NFTs) and has issued a notice on the tax treatment of NFTs as collectibles, the crypto media outlet Cryptopolitan reported on March 21.

Currently, collectibles are not subject to the same favorable capital gains tax treatment as other assets under US tax law. The IRS intends to use a "look-through analysis" to determine whether an NFT should be treated as a collectible until further guidance is issued.

Individuals selling collectibles like coins or artwork are subject to a maximum capital gains tax rate of 28%, which will also extend to NFTs that certify ownership of a coin, piece of art, or other collectibles.

The deadline for comments to be submitted on the proposed IRS guidance is June 19. However, any changes resulting from it will not apply to taxpayers needing to file their 2022 returns before the April 18 deadline.

In October, the IRS put forth a preliminary proposal that mandates American taxpayers to declare their ownership of cryptocurrencies and nonfungible tokens (NFTs) in a recently established section called "Digital Assets" on their tax returns. As a general rule, if the taxpayer retains all digital assets for the full year or moves them between their own wallets, there is no requirement to report these holdings.

Source: CRYPTOPOLITAN