The U.S. Treasury has come out to say that the Biden administration’s proposal to strengthen tax compliance entails the requirement that transfers of at least $10,000 worth of crypto be reported to the Internal Revenue Service.
In a report released on tax enforcement proposals on Thursday, the Treasury Department said that “as with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported”. According to what the Treasury said, the reporting which must be done comprehensively is important “to minimize the incentives and opportunity to shift income out of the new information reporting regime”. The Treasury said this while laying emphasis on the fact that cryptocurrency, which is now as important as any other currency, is a small share of current business transactions.
According to Bloomberg’s report on the issue, “Bitcoin pared a rebound from Wednesday’s rout on the IRS announcement, which shaved about $3,000 from the token’s price. It traded higher by 3 percent near $39,000 as of 12:33 p.m. in New York. Cryptocurrency-linked stocks like Coinbase and MicroStrategy also reversed their gains”.
To help boost tax-payment compliance and reduce evasion and avoidance, the Biden administration is asking banks to report on account flows. “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion”, The U.S. Treasury said.
The Treasury highlighted the reason it is asking that crypto transfers over $10,000 be reported to the IRS. The U.S. Treasury mentioned that as time goes on, cryptocurrency will find its way into major parts of business and human endeavours and as such should be included in the tax payments system. “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 said.