Lawmakers Push for Crackdown on Crypto Tax Evaders

Prominent Lawmakers Urge Crackdown on Crypto Tax Evaders

Prominent lawmakers in the United States have called on the Biden administration to take action against crypto tax evaders and enforce tax reporting guidelines for users in the crypto space. These lawmakers believe that there is a significant tax gap in the budget due to wilful tax evasion by cryptocurrency brokers.

Key Points:

Cryptocurrency brokers have ignored at least half of their tax obligations, resulting in a $50 billion tax gap.
Democratic Senators, including Bernie Sanders, Elizabeth Warren, Bob Casey, and Richard Blumenthal, have signed a letter urging the IRS and the Treasury to publish tax reporting guidelines and enforce them.
The lawmakers have warned that the Treasury Department and the IRS have been slow to implement the new tax rules mandated by Congress, despite a looming deadline.
Congress’s Joint Committee on Taxation has estimated that failure to address the tax gap could cost the Treasury $28 billion over the next eight years.
The new rules implemented by the Treasury Department would require entities like Coinbase to provide information about crypto trades, helping the IRS track and close the tax gap.

A Significant Gap in Crypto Tax Payments

Analysts believe that the $50 billion tax gap quoted by lawmakers could be even higher due to increased activity in the crypto space. This gap represents 10% of the national tax gap and poses a challenge for the IRS due to the anonymous nature of crypto exchanges.

New Rules Could Tackle Tax Evasion

If passed, the new rules will give the IRS the necessary tools to ensure tax compliance and go after large-scale tax evaders. President Joe Biden has expressed support for these rules, highlighting the need to close crypto loopholes that allow wealthy investors to hide their revenue. The rules will also benefit the industry by addressing fraud and corruption.

Hot Take:

Lawmakers are exerting pressure on the Biden administration to crack down on crypto tax evaders and implement tax reporting guidelines. Failure to address this issue could result in significant revenue loss for the Treasury. The new rules, if implemented, will help close the tax gap and ensure compliance in the crypto space. However, critics argue that the anonymous nature of crypto transactions poses a challenge for the IRS in effectively tracking tax payments.