Members of the United States Congress, Brad Sherman, and Stephen Lynch have written a letter to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, urging the implementation of tax regulations for the cryptocurrency industry. Sherman and Lynch expressed concerns about the widespread tax evasion within the crypto sector, referring to it as a significant contributor to the country’s tax gap.
In their letter, the congressmen referenced an audit report from September 2020, conducted by the Treasury Inspector General for Tax Administration (TIGTA), which highlighted the IRS’s failure to identify taxpayers involved in cryptocurrency transactions due to a lack of reporting. They emphasized that despite the passage of the Bipartisan Infrastructure Bill in November 2021, which mandated the reporting of crypto transactions from 2023 onwards, the proposed regulations to enforce this requirement have not been released yet.
Crypto tax
Sherman and Lynch urged the prompt release of the proposed regulations to close the tax gap and ensure full tax compliance within the cryptocurrency industry. They believe that implementing these regulations is crucial to address the ongoing issues of tax evasion and bring transparency to the crypto market.
Earlier in May, the Biden administration proposed a 30% Digital Asset Mining Energy (DAME) tax on bitcoin miners. This tax proposal, however, did not make it into the legislation addressing the increase of the U.S. debt ceiling. Despite the setback, supporters of the crypto industry anticipate that the administration may reintroduce the tax imposition in a future omnibus bill.
Congressmen Sherman and Lynch’s letter highlights the pressing need to regulate the industry and enforce tax compliance. They argue that the lack of reporting and oversight has allowed for significant tax evasion, and they call on the Treasury and the IRS to take immediate action to address these issues. The implementation of robust tax regulations is seen as essential in bringing the industry in line with traditional tax practices and closing the existing tax gap.
