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May 21, 2021
The United States Department of the Treasury filed an official report as a part of the American Families Plan proposing certain strict tax compliance measures for all businesses registered in the United States that also requires them to report cryptocurrency transactions of over $10,000 to the Internal Revenue Service(IRS).
The proposal came after news of serveral federal agencies investigating crypto and blockchain firms for possible tax evasion offenses and money laundering using cryptocurrency. The following statement from the report confirms this suspicion of the US government: "Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion."
According to the tax proposal all businesses, including cryptocurrency exchanges, banks, payment processing platforms, etc are supposed to report detailed information on cryptocurrency inflows and outflows from all individual accounts on an annual basis starting from the year 2023. This requirement accompanies the other requirements previously set by the state department in regards to crypto transactions of $10,000 or more.
The department claimed that the proporsal will help the U.S. government while trying to audit companies that reportedly have had previous discrepancies in tax filings. It also promised incentives to compliant companies should all qualifying transactions be reported with complete accuracy.
This proporsal is a part of serveral steps being taken by the U.S. regulators while trying to track the movement of cryptocurrencies more closely. For example, the Financial Crimes Enforcement Network (FinCEN) proposed a new rule that lowers the threshold amount at which banks must collect and store fund transfer information for both fiat and crypto from $3,000 to $250.
The proposal came after news of serveral federal agencies investigating crypto and blockchain firms for possible tax evasion offenses and money laundering using cryptocurrency. The following statement from the report confirms this suspicion of the US government: "Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion."
According to the tax proposal all businesses, including cryptocurrency exchanges, banks, payment processing platforms, etc are supposed to report detailed information on cryptocurrency inflows and outflows from all individual accounts on an annual basis starting from the year 2023. This requirement accompanies the other requirements previously set by the state department in regards to crypto transactions of $10,000 or more.
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.
The department claimed that the proporsal will help the U.S. government while trying to audit companies that reportedly have had previous discrepancies in tax filings. It also promised incentives to compliant companies should all qualifying transactions be reported with complete accuracy.
This proporsal is a part of serveral steps being taken by the U.S. regulators while trying to track the movement of cryptocurrencies more closely. For example, the Financial Crimes Enforcement Network (FinCEN) proposed a new rule that lowers the threshold amount at which banks must collect and store fund transfer information for both fiat and crypto from $3,000 to $250.
