The Internal Revenue Service (IRS) will demand that companies report and and all cryptocurrency transfers of over $10,000, the body said in a statement on Thursday.
"Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion", the release reads.
The action is part of US President Joe Biden’s recently announced $1.8 trillion American Families Plan that includes $80 billion in spending for the IRS to enhance its enforcement of high earners while carrying out overall modernization by “hiring new specialized enforcement staff, [and] modernizing antiquated information technology.”
“This is why the President’s proposal includes additional resources for the IRS to address the growth of cryptoassets,” the department added. “Within the context of the new financial account reporting regime, cryptocurrencies and cryptoasset exchange accounts and payment service accounts that accept cryptocurrencies would be covered. Further, as with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on.”
IRS Commissioner Chuck Rettig, speaking to the US Senate panel last month, stressed that the “actual tax gap could approach and possibly exceed $1 trillion per year” in the US, as the difference between taxes owed to the government and those actually paid totaled nearly $600 billion in 2019, according to Treasury data.
He added that the new calculations will be made with the inclusion of new fraud-detection techniques, adding that the unprecedented spread of cryptocurrency has provided new opportunities for tax evasion.
Attempts to restrict crypto circulation are said by experts to cause prices to drop. The architecture of the global digital money market remains uncertain, as some countries, but not all, intend to regulate digital assents.
The price of Bitcoin, the world’s first and still the most expensive cryptocurrency, has already dipped recently, standing currently at around $ 40,000, following an announcement by Tesla CEO Elon Musk that his company would no longer accept Bitcoin.
In addition, on 19 May, the Chinese financial regulator announced that financial and payment institutions would no longer accept cryptocurrency as payment. The report triggered a quick drop in the Bitcoin price, reaching down to $31,000.