The U.S Treasury said the current administration’s proposal to strengthen tax compliance includes a requirement for transfers of at least US$10,000 of cryptocurrency to be reported to the Internal Revenue Service. “As with cash transactions, businesses that receive cryptocurrencies with a fair market value of more than US$10,000 would also be reported on,” the Treasury Department said in a report on tax-enforcement proposals released Thursday.
U.S regulators move to regulate crypto.
According to the Bnnbloomberg report, U.S 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 a daily advance after the IRS announcement, which shaved about US$3,000 from the token’s price. Cryptocurrency-linked stocks like Coinbase and MicroStrategy also gave up some of their gains immediately after the announcement, which had also prompted an outcry from some cryptocurrency enthusiasts on Twitter.
“There was some major overreaction.”
“There was some major overreaction,” said Kristin Smith, executive director of the Blockchain Association trade group. “For those of us that believe we should try to keep crypto on par with how cash is treated – this does just that.” Cash transactions in excess of US$10,000 are already subject to IRS reporting requirements. The IRS last year added a line about cryptocurrency on Form 1040, the individual tax return, in an effort to gain more visibility into virtual currency transactions. The current U.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.