US Treasury Details Major Push to Regulate Bitcoin and Cryptocurrency
The US Treasury Department is detailing a set of new tax compliance measures designed to bring in billions in new revenue – and crypto investors are a key target.
The measures are part of President Biden’s American Families Plan and are designed to help fund the $1.8 trillion proposal to reform childcare, education and paid family leave.
The plan would essentially double the number of employees at the Internal Revenue Service by 2031 in an effort to raise $700 billion from wealthy individuals who may be holding funds offshore or using sophisticated efforts to hide income.
It requires banks and financial institutions to reveal “aggregate account outflows and inflows” of their customers. Details on exactly how much information companies will be required to hand over have not been released.
The plan also includes “additional resources” to address the growth of cryptocurrency and would give the agency the tools it needs to responsibly enforce the emerging digital asset industry.
“Despite constituting a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade, especially in the presence of a broad-based financial account reporting regime…
Within the context of the new financial account reporting regime, cryptocurrencies and crypto asset exchange accounts and payment service accounts that accept cryptocurrencies would be covered.”
The agency says the IRS needs to significantly update its technology to properly enforce the crypto economy.
“Further, noncompliance has been exacerbated by enhanced opportunities to shield income from tax liability, and even from audits.
These opportunities are particularly available for those in the top end of the income distribution who can avoid taxes through sophisticated strategies such as offshoring, creating complex partnership structures, or moving taxable assets into the crypto economy.”
Last year, the Treasury first detailed efforts to step up crypto enforcement by requiring financial institutions to report when customers send or receive $10,000 or more in cryptocurrency.
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