Tax concerns around crypto rise; Congress members pen letter
- Two U.S. legislators have raised concerns about tax compliance in the crypto industry.
- The pair hoped that the bodies would bring the industry within the ambit of complete tax compliance.
Two U.S. Congress members have written a letter to the Treasury and the Internal Revenue Service (IRS), expressing their concerns about tax compliance practices within the crypto industry.
California Brad Sherman and Massachusetts Representative Stephen Lynch, both belong to the Democratic Party. They have addressed the letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel. Further, they urged that tax regulations for the crypto industry be implemented.
The letter read:
“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.”
The legislators cited a September 2020 audit report. In it, the Treasury Inspector General for Tax Administration (TIGTA) highlighted that the IRS could not identify taxpayers engaging in crypto transactions due to a lack of reporting by third parties.
The pair reminded that the Infrastructure Investment and Jobs Act required taxpayers to report crypto transactions, beginning 2023. President Joe Biden signed the act into law in November 2021.
Though the Office of Information and Regulatory Affairs (OIRA), a division of the Office of Management and Budget, completed its review of the proposed regulations in February.
The lawmakers rued:
“The proposed regulations have yet to be promulgated.”
Bringing crypto under U.S. taxation ambit
Both of them hoped that the bodies would promptly issue the proposed regulations to close the tax gap and bring the crypto industry within the ambit of complete tax compliance.
The U.S. administration, under President Biden, renewed its push last month for a 30% Digital Asset Mining Energy (DAME) tax on crypto miners. The proposed crypto mining tax, however, was not included in the May legislation that addressed lifting the U.S. debt ceiling.
While concerns surrounding a 30% tax on crypto mining have subsided, crypto proponents feel it is only a temporary arrangement.