FameEX Hot Topics | Letter to Treasury Points Finger at Crypto Firms for 'Tax Gap,' Say US Lawmakers

In a letter directed to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, two members of the United States Congress, Brad Sherman and Stephen Lynch, have expressed their concerns regarding tax compliance practices within the cryptocurrency industry. The letter emphasizes the need for the implementation of tax regulations specifically tailored to the crypto sector.

The congressmen drew attention to the significant role that the cryptocurrency industry plays in tax evasion and its contribution to the nation's tax gap. They referenced an audit report from September 2020, which revealed the IRS's struggles in identifying taxpayers involved in crypto transactions due to inadequate reporting.

Furthermore, the Infrastructure Investment and Jobs Act, also known as the Bipartisan Infrastructure Bill, was signed into law by President Joe Biden in November 2021. The legislation stipulated that taxpayers must report their crypto transactions starting from 2023. However, Sherman and Lynch highlighted that the proposed regulations for enforcing this requirement are yet to be released. With more than half of 2023 already passed, the congressmen urged the prompt issuance of the proposed regulations. They emphasized the importance of closing the tax gap and ensuring full tax compliance within the cryptocurrency industry.

In May, the Biden administration made a renewed effort to implement a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners. This tax was initially introduced as part of Biden's FY2024 budget in March 2023. However, the proposed crypto mining tax did not find its way into the May legislation that aimed to address raising the U.S. debt ceiling. Although concerns surrounding the 30% tax on crypto mining have somewhat subsided, proponents of cryptocurrencies view it as a temporary reprieve. Nic Carter, co-founder of Coin Metrics, believes that the administration will likely reintroduce the tax proposal in a future omnibus bill.

In conclusion, the letter penned by Congressmen Brad Sherman and Stephen Lynch calls for the prompt implementation of tax regulations specific to the crypto industry. It emphasizes the role of cryptocurrencies in tax evasion and the need to close the tax gap. Additionally, the congressmen highlight the delayed release of proposed regulations, urging the Treasury and IRS to take action. The ongoing debate surrounding the 30% tax on crypto mining is also 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.