A tax enforcement proposal from the Biden administration may compel businesses to report bitcoin transactions exceeding $10,000 to the IRS.
A tax enforcement proposal from the Biden administration would compel businesses accepting bitcoin transactions of more than $10,000 to report them to the Internal Revenue Service (IRS).
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” according to a report from the U.S. Department of the Treasury on tax enforcement proposals, issued today. “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.”
The report was part of a larger announcement about new methods to combat tax evasion being explored by the Biden administration. These would include providing more funding and resources to the IRS and instituting harsher penalties for tax evaders, per CNBC.
The report comes in the wake of other indicators that the IRS wants to compel bitcoin investors to pay applicable taxes more readily. In April, the agency was authorized to summon Circle and Poloniex to provide user data and earlier this month, it received approval to do the same for Kraken users. Recently, a deputy associate chief counsel for the IRS indicated that it would attempt to seize “virtual” currencies like bitcoin to satisfy tax collection if necessary.
Bitcoin is a permissionless financial system that can be leveraged pseudonymously, so there is question about how thoroughly the IRS can track its use.