Do you want to buy a car with bitcoin? If the Biden administration has anything to do with this, the Internal Revenue Service will know.
In another sign of the federal government’s growing attention to cryptocurrency, the Treasury Department on Thursday said it wanted to require companies to report large cryptocurrency transactions to the IRS.
“As with cash transactions, companies that receive cryptoassets with a fair market value of more than $ 10,000 would also be reported,” the Treasury Department said. mentionned Thursday in a report outlining potential new tax compliance measures.
The crypto reporting requirement is part of a larger effort by the Biden administration to attract more taxpayer dollars – via tax hikes on the rich and tighter enforcement of existing tax laws – for its US plan $ 1.8 trillion, a sweeping proposal that would offer paid family leave, free community college and universal preschool.
Stricter tax enforcement would be done in two ways: more funding to rebuild the IRS ranks, and more information reported to the IRS so the tax agency could better understand where the money is going and who. the.
“Although cryptocurrency represents only a small part of current business transactions, such a comprehensive report is needed to minimize the incentives and the opportunity to shift income out of the new reporting regime,” the report said. report.
Kell Canty, CEO of Verady, which provides cryptocurrency tax accounting products to individuals and businesses, said businesses are already required to report fiat currency transactions over $ 10,000 on IRS Form 8300. The form requests the identity of the parties or companies participating in the transaction and the method of payment.
If the Biden administration’s proposal became law, it would extend that same reporting requirement to cryptocurrency transactions, he said.
“They report, ‘We’re going to get all kinds of guidance on who’s spending cryptocurrency,” Canty said of the administration’s proposal.
Virtual currency can be used for certain purchases. For example, MLB’s Oakland A’s and NBA’s Dallas Mavericks sold tickets in exchange for DOGEUSD dogecoin,
but Tesla TSLA,
CEO Elon Musk recently said that the electric vehicle market has “suspended purchases of vehicles using bitcoin” due to the environmental bitcoin toll BTCUSD,
Bitcoin sold off strongly on Wednesday. Thursday it was bouncing back.
In fiscal year 2019, the gap between taxes paid and taxes owed to the federal government was estimated at $ 584 billion, according to the Treasury Department report on Thursday.
That’s less than IRS Commissioner Charles Rettig’s estimate that there could be an annual tax gap of $ 1 trillion. The under-reporting and non-reporting of cryptocurrency gains play a role in this tax gap, he said at the time.
The IRS applies capital gains tax rules to cryptocurrency, just as it would with stocks. But the IRS needs to know the sales, profits, and losses before it can assess a tax.
The tax collection agency has taken to the courts for cryptocurrency exchanges to provide information about some customers who may be less than upfront about their cryptocurrency holdings. For example, in April, a federal judge approved a subpoena to Circle for the account activity of clients with at least $ 20,000 in transactions between 2016 and 2020.
(The IRS and the Department of Justice have noted that they do not allege any wrongdoing by Circle.)
Another sign of the IRS’s curiosity about cryptocurrency, it redesigned the appearance of Form 1040 to prominently include a question about cryptocurrency.