Legislative Push for Crypto Tax Compliance
In a bold move that could reshape the way the cryptocurrency sector interacts with the IRS, two prominent U.S. Congress members have taken it upon themselves to pen a letter to the heads of the Treasury and the Internal Revenue Service.
Concerns Raised Over Tax Evasion
Representatives Brad Sherman and Stephen Lynch are raising the alarm on what they describe as rampant tax evasion within the crypto space. They pointedly noted, “For years now, that (crypto) industry has been a major source of tax evasion and a significant part of the nation’s tax gap.” They are not just throwing around words; they highlight findings from a 2020 audit that indicate a gaping hole in tracking pro-crypto taxpayers.
Research Findings
The Treasury Inspector General for Tax Administration underscored the IRS’s challenges in identifying cryptocurrency investors due to insufficient reporting practices. The implication? The tax man might never see that money unless tighter regulations are enforced.
Infrastructure Legislation Waiting for Action
Further complicating this financial landscape is the Infrastructure Investment and Jobs Act, which was signed into law in November 2021. This legislation mandates that taxpayers report their crypto transactions starting in 2023. As Sherman and Lynch stated, “the proposed regulations have yet to be promulgated.” Talk about holding the proverbial bag!
Crypto Mining Tax: A New Challenge
As if things couldn’t become more convoluted, the Biden administration has made moves to introduce a 30% Digital Asset Mining Energy (DAME) tax, proposed in FY2024 plans back in March 2023. Despite the absence of this sweeping tax in recent debt ceiling discussions, there’s speculation that it might surface again in some future legislation.
Industry Reactions
Industry insiders remain skeptical, with figures like CoinMetrics’ Nic Carter suggesting this is merely a pause rather than a defeat for crypto taxation. The cryptocurrency community is bracing for the possible return of this tax as discussions evolve.
Conclusion: Waiting for Clarity
The White House hasn’t commented publicly about its intentions moving forward regarding the DAME tax. Both lawmakers and crypto advocates are in a state of suspense, waiting to see how the regulatory landscape will shift in the coming months. Will we see crypto compliance become the norm, or continue as a ‘wild west’ scenario? Only time will tell!
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