The U.S. Treasury said the Biden administration’s proposal to strengthen tax compliance includes a requirement for reporting transfers of at least $10,000 of cryptocurrency to the Internal Revenue Service.
“As with cash transactions, businesses that receive cryptoassets with a fair-market value of more than $10,000 would also be reported on,” the Treasury Department said in a report on tax-enforcement proposals released Thursday.
The Treasury said that comprehensive reporting is necessary “to minimize the incentives and opportunity to shift income out of the new information reporting regime.” It noted that cryptocurrency is a small share of current business transactions.
Bitcoin pared its rebound from Wednesday’s rout on the IRS announcement, shaving about $3,000 from the token’s price. It traded higher by 3% near $39,000 as of 12:33 p.m. in New York. Cryptocurrency-linked stocks like Coinbase and MicroStrategy also reversed their gains.
In 2020, the IRS added a line about cryptocurrency on the Form 1040, the individual tax return, in an effort to gain more visibility into virtual currency transactions.
President Joe Biden’s administration is also calling for banks to report on account flows to help boost tax payment compliance.
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury said.
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Pro-bitcoin professionals, however, say the cryptocurrency has ushered in change.
“LPL has evolved significantly over the last decade and still wants to scale up,” says one industry executive.
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