• The Biden administration is calling for banks and crypto exchanges to report transactions to the Internal Revenue Service.
  • In a bid to reduce the tax gap, the Treasury is requesting the reporting of digital asset transfers of over $10,000.
  • Under the proposal, payment service accounts that accept digital currencies would also be covered. 

United States President Joe Biden is allocating more funding to the Internal Revenue Service (IRS) to apply traditional standards to crypto exchanges. 

Crypto to rise in importance in the next decade

According to the president's tax compliance measures, the United States Department of Treasury is cracking down on tax evasion involving digital assets.

In the published report by the Treasury, one of the proposals requires “increased information reporting,” explaining that financial accounts will be subject to additional visibility of gross receipts and expenses to the IRS. 

The reporting regime would cover foreign financial institutions as well as cryptocurrency exchanges and custodians. With $2 trillion in market capitalization, the report highlighted:

Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.

The proposal also noted that although cryptocurrencies constitute a relatively small portion of business income today, digital asset transactions are likely to rise in importance in the next decade. 

The Treasury calls for transactions related to cryptocurrency transactions greater than $10,000 to be reported to the IRS. As part of the new regime, banks, crypto exchange accounts and payment services that accept the new asset class would also be covered. 

Currently, the IRS does not have any independent verification of crypto-related transactions, which is potentially leading to a widening tax gap. The Treasury will require businesses to report more information on their inflows and outflows from accounts each year starting in 2023. 

The report added:

Financial institutions house a lot of valuable information, and indeed already provide third-party reports to the IRS. Leveraging this information – rather than introducing new requirements for taxpayers – is a proven way to improve compliance.

83.6% of taxes were paid voluntarily and on time from 2011 to 2013, according to data from the IRS in October 2020. The Treasury Department reports that the tax gap could reach around $7 trillion in the next 10 years. The new proposal aims to reduce this gap by 10%, as the government would be able to audit companies with any tax discrepancies more effectively. 

Bitcoin price fell 5% after the proposal was announced following China’s regulatory crackdown on cryptocurrencies a day earlier.

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Cryptos feed Join Telegram

Recommended content


Recommended Content

Editors’ Picks

LUNA price approaches a launchpad, but will buyers come together?

LUNA price approaches a launchpad, but will buyers come together?

LUNA price shows a sign of healthy retracement after an egregious spike in buying pressure that triggered a quick and swift run-up. The ongoing pullback will provide investors with another chance to rally.

More Terra news

Why buying Solana price at these levels will provide the best ROI?

Why buying Solana price at these levels will provide the best ROI?

Solana price seems to be hovering inside a consolidation with no signs of a breakout. Investors can expect a dip to $31.66 or $24.52 levels in the near future as liquidity below these levels remains untapped.

More Solana news

Shiba Inu price hints at a 150% upswing, an opportunity too good to pass up

Shiba Inu price hints at a 150% upswing, an opportunity too good to pass up

Shiba Inu price has been hovering around a significant barrier for roughly three months with virtually no momentum to move above it. This development might be primed for a strong move but the directional bias remains unknown. 

More Shiba Inu news

Bitcoin Price Prediction: An update on the fractal forecast to $21,000

Bitcoin Price Prediction: An update on the fractal forecast to $21,000

Bitcoin price shows lackluster performance despite the announcement of BlackRock’s entry into crypto. Due to the spotlight on Ethereum and its upcoming Merge update, investors seem to be neglecting BTC.

More Bitcoin news

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin: If bulls lose control here, BTC could revisit $21,000

Bitcoin price shows an interesting setup that could reveal its next move. On closer inspection,  its technicals support a bearish outlook for the leading crypto.  

Read full analysis

BTC

ETH

XRP