FameEX Hot Topics | US Lawmakers Accuse Crypto Firms of Contributing to 'Tax Gap' in Letter Addressed to Treasury

In a letter addressed to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, Brad Sherman and Stephen Lynch, two members of the United States Congress, have raised concerns about tax compliance practices within the cryptocurrency industry. The letter emphasizes the urgent need for tailored tax regulations specifically designed for the crypto sector. Sherman and Lynch draw attention to the significant role that cryptocurrencies play in facilitating tax evasion and contributing to the nation's tax gap. They reference an audit report from September 2020, which exposed the IRS's challenges in identifying taxpayers involved in crypto transactions due to insufficient reporting.

The congressmen also highlight the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Bill, signed into law by President Joe Biden in November 2021. The legislation mandates that taxpayers must report their crypto transactions beginning in 2023. However, Sherman and Lynch point out that the proposed regulations to enforce this requirement have not yet been released. Given that more than half of 2023 has already passed, the congressmen emphasize the immediate need for the issuance of the proposed regulations. They underscore the importance of closing the tax gap and ensuring full tax compliance within the cryptocurrency industry.

In May, the Biden administration made a renewed attempt to introduce a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners. This tax was initially proposed as part of Biden's FY2024 budget in March 2023. However, the proposed crypto mining tax did not make it into the May legislation aimed at addressing the U.S. debt ceiling. While concerns surrounding the 30% tax on crypto mining have somewhat subsided, proponents of cryptocurrencies perceive it as a temporary reprieve. Nic Carter, co-founder of Coin Metrics, believes that the administration is likely to reintroduce the tax proposal in a future omnibus bill.

In conclusion, Congressmen Brad Sherman and Stephen Lynch's letter urges the swift implementation of tax regulations tailored specifically for the crypto industry. It emphasizes the role of cryptocurrencies in facilitating tax evasion and emphasizes the need to close the tax gap. The congressmen also draw attention to the delayed release of proposed regulations, calling upon the Treasury and IRS to take prompt action. The ongoing debate surrounding the 30% tax on crypto mining is mentioned, with expectations that it will resurface in future legislative discussions.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.