Biden proposes IRS disclosure on all crypto transactions above 10k

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The Finance Ministry has released a report proposing new requirements for transactions involving cryptocurrency trading. The proposal would go as far as crypto-asset exchanges and payment and settlement agencies to prevent taxpayers from switching from interim financial institutions to crypto platforms to protect the flow of IRS accounts.

The new reporting system also requires companies to submit a report to the IRS if they receive payments in crypto-currencies whose fair market price exceeds $ 10,000. Currently, companies are required to report payments in currencies above $10,000 and certain cash equivalents.

The Treasury proposal is a small step towards the type of government regulation that helps clarify the value of an investment and the potential use of cryptocurrencies in the wider economy.

According to the report, the new reporting requirement is that cryptocurrency has already caused serious detection problems by promoting common illegal activities, including tax evasion,” especially for cryptocurrencies and crypto-assets. We are dealing with a replacement. In addition, cryptocurrency trading is expected to increase over the next decade.

The Treasury estimates that the tax gap in 2019 is close to $ 600 billion for him. Tax gaps are the result of many factors, including limited IRS resources. Between the financial year2010 and fiscal year 2021, the IRS budget decreased by 18.5%. As a result, between 2010 and 2018, the percentage of audited tax returns decreased by approximately 45%, and audits of taxpayers with incomes over $ 1 million fell by about 60% over the same period.

In April 2021, the President announced a proposed American Family Plan that would require him to increase IRS funding by $ 80 billion. The increased funding of the IRS aims to expand the IRS workforce and invest in its information technology and data analysis. . The IRS estimates that every $ 1 spent on taxes will generate $ 4 in direct income.

The price of bitcoin continues to decline and is already trading at less than $ 50,000 after it was reported that US President Joe Biden plans to increase the capital gains tax for the wealthy. The bitcoin fell more than 9%, reaching the US $ 49,800 when less than ten days ago, it reached new all-time highs and exceeded the US $ 63,000.

Initially, one of the reasons that drove bitcoin prices down was the measure taken by the Central Bank of Turkey about restricting payments with the cryptocurrency. Most cryptocurrency transactions are pseudo-anonymous because they hide the identity of their commercial currencies, but the blockchain technology that enables cryptocurrencies makes public ledgers less privacy-friendly.

If you own cryptocurrencies, tracking the following throughout the year will help you report your cryptocurrencies at the time of taxation and understand how other potential regulatory measures will affect you.

  • Know the cost base (the amount invested in cryptocurrencies regardless of the increase or decrease in value)
  • Date of acquisition of encryption
  • Where are the ciphers stored?
  • Transactions or remittances made with exchanges or cryptocurrency wallets

In 2020, the IRS has already added a requirement for cryptocurrency disclosure to its personal tax return, Form 1040, in order to collect more taxes from cryptocurrency transactions.