Almost two years after Biden’s infrastructure bill became law, two high-profile Democrat senators are keen on ensuring that crypto reporting requirements within the bill are properly enforced.
Senators Elizabeth Warren (D-Mass.), Bob Casey (D-Pa.), and Richard Blumenthal (D-Conn.) joined Bernie Sanders (I-Vt.) on Tuesday in signing a letter to the IRS and Treasury Department to publish tax reporting guidelines for digital assets “brokers,” for which the deadline approaches fast.
“The bipartisan Infrastructure Investment and Jobs Act [IIJA] established new reporting requirements that will help to close the roughly $50 billion crypto tax gap,” reads the letter.
Beyond addressing “runaway tax evasion” across the crypto economy, the politicians said the guidelines would “ensure that taxpayers have the tools they need to more easily report taxable crypto income.”
However, despite the White House finishing a review of the rules in May, neither the Treasury nor IRS have released those rules. Senators noted that both agencies are at risk of missing their implementation deadlines, which are only 6 months away.
The letter cited an analysis from Barclays in 2022, claiming that the crypto industry was paying less than half of the taxes it owed, and accounted for roughly 10% of total unpaid taxes. Due to issues relating to anonymous transaction recipients on the blockchain, Barclays said this estimate was still ”probably too small.”
Billions In Tax Revenue At Risk
By contrast, the letter also cited the Tax Law Center at New York University School of Law, which said that new tax rules would allow crypto users to more easily file taxes, while enabling the IRS to tackle “large-scale tax cheats.”
Over the next eight years, the analysis suggests that these rules will help generate $28 billion in tax revenue. Meanwhile, senators warn that if not implemented by the December 31 deadline, they “risk losing an estimated $1.5 billion in tax revenue in 2024.” It added:
“Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government. You must not give them that chance.”
By August 15, the senators expect the Treasury to clarify when it intends to issue regulations related to the new reporting requirements, and for how long it will be accepting public comment on those requirements once released.
The politicians also requested an estimate of how much tax revenue may be lost next year if the regulations aren’t implemented by year’s end.
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