The approach will be valid for returns filed after December 21, 2022. Tax evasion using crypto assets is becoming a huge problem.
The administration of the President of the United States, Joe Biden, is looking for ways to reach those users who are evading taxes with cryptocurrencies and, therefore, reducing the money that enters the public administration.
Such an assertion emerges from the budget plan presented for the fiscal year 2022, on May 28, 2021, by the US head of state. This project also adds two proposals that would bring to institutions additional requirements related to what kind of data financial entities must report to the Internal Revenue Service (IRS) or other sub-departments of the Treasury.
This first proposal would create an expansive broker reporting on crypto assets. The information expanded through a Treasury Department Green Book, published in May 2021. This publication also highlights that the proposed change would expand the horizons of the information reported by brokers, by allowing them to share data in various jurisdictions that have been associated with the United States of America.
This proposal would be helpful for returns filed after December 31, 2022, according to the document. Tax evasion using crypto assets is becoming a worrying problem. Since the industry is fully digital, taxpayers can trade with offshore crypto exchanges and wallet providers without leaving the United States of America.
Financial Institutions Must Report Transfers over USD 600
According to the Treasury Department document, there is one more proposal in the 2022 budget. This one talks about the introduction of a structure of “comprehensive financial accounts reports” to comply with tax requirements. This will require financial institutions to report data on user accounts with a breakdown into diverse types of transfers above a minimum threshold of USD 600.
The proposal would include crypto-asset exchanges and custodians. Separately, notification requirements would apply in cases where taxpayers purchase crypto-assets from one broker and then transfer the crypto assets to another broker, and companies accepting crypto assets in trades with a fair market value of more than USD 10,000. They would have to report such operations.
A week before the 2022 budget was presented, the Treasury Department stated that companies that receive transfers of more than USD 10,000 in cryptocurrencies must issue a report to the Internal Revenue Service.
The requirement currently pairs with transfers of USD 10,000 and more in US dollars. The Treasury report highlighted virtual currencies and cash as potential ways to hide revenue from the government entities.
US Government Insists on Regulating ryptocurrencies
Since 2016, the US government has tried to regulate cryptocurrency exchange houses. The Financial Stability Supervision Council made a report that analyzed the threats to the financial system in the United States of America.
The commission, made up of executives from the Federal Reserve and the Security Commission in Securities Markets, also reflected on the threats of cyber-attacks and low-interest rates, among others.
By: Jenson Nuñez
