You may soon have to report all cryptocurrency transfers over $10K directly to the IRS
While only a small part of the new tax compliance proposal, it could have significant impact in the years to come if it is approved.
The US Treasury Department released its new tax compliance proposal, called The American Families Plan Tax Compliance Agenda, and while most of it pertained to traditional currencies and reporting, one part that sticks out regards cryptocurrency.
It is mentioned that “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.” The report also notes that crypto makes up a small portion of business income in 2021, it is expected to grow in importance over the next decade.
Cash transfers of over $10,000 already have to be reported and this new proposal would make crypto fall under that reporting, as well.
The reasoning behind this proposal, according the the report, is that it “comprehensive reporting is necessary to minimize the incentives and opportunity to shift income out of the new information reporting regime.”
Bitcoin prices, unsurprisingly, dropped a bit with the news. Right now, many cryptocurrencies are still trying to recover from the massive drop that occurred earlier this week, which was due, in part, to tweets from Elon Musk regarding Tesla no longer accepting Bitcoin.
Kristin Smith, executive director of the Blockchain Association trade group, tells Bloomberg, “There was some major overreaction. For those of us that believe we should try to keep crypto on par with how cash is treated – this does just that.”
That said, The Verge points out that many of the proposed changes outlined in the report would have to gain congressional approval before being made official.
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