Two US congressmen are calling on the Internal Revenue Service (IRS) to speed up efforts to ensure cryptocurrency users are complying with tax rules.
In a new letter, Rep. Brad Sherman of California and Rep. Stephen Lynch of Massachusetts blame the crypto industry for a major source of tax evasion.
The letter, sent to Treasury Secretary Janet Yellen and Internal Revenue Service Commissioner Daniel Werfel, calls for a speedy promulgation of tax-related reporting requirements for digital assets.
According to the two Democratic congressmen, the passage of the 2022 Infrastructure Investment and Jobs Act required cryptocurrency companies to start tracking and reporting customers’ transactions to the IRS for tax reporting purposes. The Treasury Department announced in December 2022 that the reporting requirement will not go into effect for the crypto firms until the department issues regulations for the reporting.
However, those regulations have yet to be issued, and the Congressmen urge the IRS to deliver them as soon as possible.
Says the letter,
“The cryptocurrency industry had all of 2022 to prepare for infrastructure law’s tax reporting requirements and now it apparently gets 2023 off as well. We hope Treasury/IRS will promptly release the proposed regulations so we can close the tax gap and bring the cryptocurrency industry into full tax compliance.”
According to the congressmen, transaction reporting from crypto firms will go a long way to bring the industry into tax compliance.
The letter cites a September 2020 Treasury Inspector General report that said the “IRS cannot easily identify taxpayers with virtual currency transactions because of the lack of third-party information reporting that specifically identifies virtual currency transactions.”
Say the two congressmen,
“We write to express our deep concern about the state of tax compliance by the cryptocurrency industry. For years now, that industry has been a major source of tax evasion and a significant part of the nation’s tax gap.”
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