The Biden administration has proposed new reporting requirements that include consideration for the growth of cryptoassets. the US Treasury described a wide range of compliance measures, which he said would “increase the fairness of the tax system and promote a tax system where Americans pay the taxes they owe.”
Among the proposed measures were new reporting requirements for crypto transfers above the threshold of $ 10,000 (Â£ 7,000, â¬ 8,200) with financial institutions, including foreign financial institutions and exchanges and custodians of assets. crypto also covered by the reporting regime.
The Biden administration laid out its plan earlier this year in its U.S. Plan for Families to overhaul the U.S. tax system. The US Treasury report outlines initiatives to help close the “tax gap” – the difference between taxes owed to the government and those actually paid. A gap estimated by the Treasury stood at nearly $ 600 billion in 2019 and it estimates could grow to around $ 7 billion over the next decade if left unaddressed.
End tax evasion
Although crypto assets are a small subset of the financial market – $ 2 billion in market capitalization, according to the Treasury – its growth is becoming a source of concern for government officials in other countries like Canada and China, who both issued digital currency warnings earlier this week. The Treasury said that “cryptocurrency already poses a significant detection problem by facilitating illegal activity, including tax evasion.”
Addition: “improved opportunities to protect income from tax liability, and even audits.” These opportunities are especially available to those at the top of the income distribution who can avoid taxes through sophisticated strategies such as offshoring, creating complex partnership structures or moving taxable assets around the economy. crypto. “
The government expects cryptocurrency transactions to continue to grow over the next decade, especially in light of a new reporting system, and will add resources to the Internal Revenue Service to service the wider network it has created under the new reporting regime. The Treasury report concluded: âAlthough cryptocurrency represents only a small portion of current business transactions, such a comprehensive reporting is necessary to minimize the incentives and opportunities to transfer income out of the new reporting regime. ‘information. “
Read more: Economic Snapshot: New Inflationary Pressures in the United States
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