New measures? The US Department of the Treasury has announced measures to crack down on tax evasion involving cryptocurrencies as part of President Joe Biden’s proposed tax compliance measures.
Floated is an idea that requires businesses that receive crypto assets with a fair market value of more than $10,000 to report transactions to the IRS. This is quite a turn from the current policy in place that has crypto purchases made in US dollars not reportable to the revenue service.
But that could change.
The US Treasury published a report this past Thursday entitled “The American Families Plan Tax Compliance Agenda”, which outlines Biden’s proposed tax compliance measures.
Among the proposals is increased information reporting, with President Joe Biden crafting a proposal requiring information reporting on financial accounts to increase the visibility of gross receipts and expenses to the IRS.
The reporting regime would also cover foreign financial institutions and crypto asset exchanges and custodians. As noted in the report, virtual currencies pose a significant concern as the space has grown to $2 trillion in market capitalization.
It emphasizes:
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”
The proposal details that within the context of new financial account reporting regime, cryptocurrencies and crypto asset exchange accounts and payment service accounts that accept cryptocurrencies would be covered:
“As with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported on.”
The President’s proposal includes additional resources for the IRS to address the growth of crypto assets. The Treasury report continues that despite constituting of a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade.
This holds especially true in the presence of a broad-based financial account reporting regime.
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