A group of prominent legislators from the United States are pushing for rapid action from the Internal Revenue Service (IRS) and the Treasury Department to eliminate tax loopholes that they believe are being exploited by cryptocurrency tax evaders.
On August 1, Democratic Senators Elizabeth Warren (1), Bernie Sanders, Bob Casey, and Richard Blumenthal sent an urgent letter (2) to the heads of the IRS and the Treasury. They expressed concerns about the slow pace of action on new tax regulations.
Highlighting the Crypto Tax Deficit
The lawmakers pinpointed a '$50 billion crypto tax gap' and cautioned that a delay in updating the tax policy could result in a loss of approximately $1.5 billion in tax revenue for the 2024 fiscal year.
The senators' references are primarily to the tax laws specified in the Senate’s infrastructure bill, which was passed in August 2021 and aimed to tighten tax reporting requirements for businesses operating as cryptocurrency brokers.
A Call for Prompt Regulation
The letter expressed concern that the Treasury Department has not yet proposed rules, even though almost two years have passed since the legislation was enacted, and the deadline for implementation is less than half a year away.
Although the bill has been enacted into law, the Treasury and the IRS have yet to introduce their new tax guidelines. While they have until the end of 2023 to publish and enforce the rules, the lawmakers are pushing for a much earlier implementation.
Mixed Views on Crypto in the Political Sphere
Warren has been publicly critical of the cryptocurrency industry in the U.S., even assembling an 'anti-crypto army' as part of her Senate re-election campaign.
While Sanders has not been as vocal about cryptocurrency as some of his Democratic colleagues, he has supported several initiatives led by Warren to impose stricter controls on the sector.
Interestingly, a recent survey commissioned by Grayscale Investments indicates that the majority of the public, including 59% of Democrats and 51% of Republicans, see cryptocurrency as the future of finance. This suggests that Warren's position may not resonate with the majority of voters.