US Lawmakers Urge Government to Crack Down on $50 Billion in Crypto Tax Evasion
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US lawmakers are urging federal officials to crack down on crypto firms that may be evading as much as $50 billion in taxes.
Democratic Senators Elizabeth Warren, Bernie Sanders, Bob Casey, and Richard Blumenthal wrote a letter to the Department of Treasury and the Internal Revenue Service to urge them to act swiftly in implementing rules to close loopholes that are allowing crypto firms to syphon off potential tax revenues.
The senators said regulators are yet to develop regulations on new reporting requirements for cryptocurrency trading that had been mandated by the 2021 Infrastructure Investment and Jobs Act, and that the deadline set by Congress is for the end of this year.
“Nearly two years have passed since the law was enacted, and the implementation deadline is less than six months away – but Treasury has yet to publish proposed rules,” wrote the senators. “Without quick action, your agencies are at risk of failing to meet their congressionally-mandated deadlines for implementation of a final rule.”
Two years ago, Congress directed @USTreasury and @IRSnews to write new tax rules for crypto. We're still waiting. Wealthy tax cheats and crypto brokers continue to game the system due to loopholes, and it should be easier for investors to file their taxes. https://t.co/0aBfLo58dH
— Elizabeth Warren (@SenWarren) August 3, 2023
US Lawmakers Say Losses May Reach $1.5bn in 2024
The lawmakers warned that the Treasury and the IRS risk missing out on roughly $1.5 billion in tax revenue for the 2024 fiscal year, and that the losses may amount to $28 billion over the following eight years.
“Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government,” they said. “You must not give them that chance.”
The 2021 IIJA
The IIJA, if implemented by the Treasury, would require third-party brokers that facilitate crypto transactions such as those on Coinbase to report to the IRS all relevant information. Some experts say the implementation of the Act may go a long way toward giving the IRS the resources it needs to pursue large-scale tax evaders and reduce the crypto tax gap.
US President, Joe Biden has previously complained that crypto loopholes are enabling wealthy crypto investors to hide their income from authorities.
An Analysis conducted by Barclays last year revealed that crypto investors were collectively not paying the Internal Revenue Service (IRS) about half of the taxes they owed. An extrapolation of the 2017 IRS figures indicated taht the amount is about $50 billion per year, accounting for 10% of unpaid taxes owed to the IRS.
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