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IRS Seeks Comments on Tax Treatment of Nonfungible Tokens

Government Affairs

The Treasury Department and the IRS seek feedback regarding the tax treatment of a nonfungible token (NFT) as a collectible under the tax law. The matter has relevance not only for saving and investment, but also for IRAs. 

The announcement comes in IRS Notice 2023-27

The IRS also seeks comments on the treatment of NFTs as collectibles and describes how the IRS intends to determine whether an NFT is a collectible until it issues further guidance.

Relevance to IRAs


Internal Revenue Code Section 408(m)(2) provides for a specific list of items that constitute collectibles for certain purposes. Acquisition of a collectible by an IRA or individually directed account of a qualified plan is treated as a distribution from the account equal to the cost to the account of the collectible. The IRS also notes that “generally, collectibles also do not have as advantageous capital-gains tax treatment as other capital assets.”

Until it issues the additional guidance it plans to release, the IRS says it intends to determine when an NFT is treated as a collectible by using a "look-through analysis." Under such an analysis, an NFT is treated as a collectible if the NFT's associated right or asset falls under the definition of collectible in the federal tax code. For example, a gem is a collectible under section 408(m); therefore, an NFT that certifies ownership of a gem is a collectible.

Making a Comment


The Treasury Department and the IRS are requesting comments on any aspect of NFTs that might affect the treatment of an NFT as a collectible as well as certain comments specifically set out in the notice.

The IRS will accept comments submitted in writing on or before June 19, 2023.

Comments may be submitted electronically via the Federal eRulemaking Portal at; type “Notice 2023-27” in the search field on the home page to find this notice and submit comments.

Comments also may be submitted by mail to: 

Internal Revenue Service 
Attn: CC:PA:LPD:PR (Notice 2023-27)
Room 5203 
P.O. Box 7604 
Ben Franklin Station 
Washington, D.C. 20044

Comments should include a reference to Notice 2023-27.

Finding out More

Notice 2023-27 is available here: