US Treasury wants Cryptocurrency Transfers over $10,000 to be Reported to the IRS
The US Treasury Department announced on Thursday that it will require any cryptocurrency transfer worth $10,000 or more to be reported to the IRS. The department’s plan outlined several policies aimed at increasing tax enforcement, which, in addition to the new cryptocurrency proposal, includes new reporting requirements and a big increase for the IRS’s budget.
The agency said in a new report on tax compliance proposals, “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion. This is why the President’s proposal includes additional resources for the IRS to address the growth of cryptoassets.”
The Treasury report said that even though cryptocurrency transactions are a small fraction of business transactions in the US, requiring large crypto transactions to be reported would help “to minimize the incentives and opportunity to shift income out of the new information reporting regime.”
According to the report, “At the crux of these proposals is a commitment to revitalizing tax enforcement. Working to close the tax gap reflects a commitment to ending our two-tiered tax system, one where most American workers pay their full obligations, but high earners who accrue income from opaque sources often do not.”
The proposed changes would create new reporting requirements built on the framework of existing 1099-INT forms that taxpayers currently use to report interest earned. Cryptocurrency exchanges and custodians would be required to report more information on the “gross inflows and outflows” of money moving through their accounts. Businesses would also be required to report cryptocurrency transactions above $10,000 under the new reporting requirements.
The Treasury Department’s Office of Tax Analysis estimated that the proposed updates would raise an additional $700 billion in tax revenue over the next 10 years and could bring in as much as $1.6 trillion in the following decade. Many of the changes the Biden administration proposes in the report would require Congressional approval, however.