The U.S treasury to strengthen the rules by reducing tax gaps, as they pose illegal threats.
On Thursday, the Treasury Department announced that it is taking measures to track down the cryptocurrency markets as well as transactions, and added that any transaction worth $10,000 or more will immediately need to report to the Internal Revenue Service. The Treasury Department added in the announcement about how cryptocurrency has created a fuss and poses a fair amount of threat by executing illegal activities, which also includes tax evasion.
Considering the event of illegal activities facilitated with the help of cryptocurrency, the U.S. President included additional resources in the announcement for the Internal Revenue Service to report the growth of crypto assets.
There will be new requirements included, which will make it easier for government to keep track of digital currency and money transactions. These parameters are taken to improve detection problem in cryptocurrency, which is constantly used by wealthy parties to evade taxes.
Treasury Department to disrupt illegal activities executing through digital currencies.
The proposal includes a new way of requiring reports, which will be based on the framework of 1099-INT forms. The 1099-INT is currently used by taxpayers in order to inform about the interest earned. The custodians and cryptocurrency exchanges will be needed to address entire information on ‘gross inflows and outflows’ about the money transactions happening through their accounts. Businesses will also be needed to report cryptocurrency transactions over $10,000, which is given under the new reporting rules.
The cryptocurrency concept maybe not new, but it has come to everyone’s attention in the current year. Given the fact that there were viral meme coins, including Dogecoin. These were supported by some strong and famous faces on the social media platforms, which also opened the door of opportunities for more than expected people. With this much attention given to cryptocurrency, investors also entered the market. Now the government has invaded these activities to keep a closed eye on illegal crypto trading.
It is believed that in the upcoming years, transactions with cryptocurrency will be more common in comparison to other mediums existing currently. The possible popularity coming over next years will surely make the detection problem overloaded. According to the new plan, it truly suggests that currently, the cryptocurrency owns a smaller percentage of transactions, and newly introduced rules will make keep track of tax evasions happening via digital currencies. The current tax gaps are closing down, which might be abused in the current time.
Wealthy tax filers are often seen as attempting tax evasion- Treasury Department.
The Treasury Department also shares the data about how rich tax filers repeatedly escape from paying the taxes via various complicated schemes, which IRS does not have the resources to dig out the information. The report mentions the details about multi-year effort, which will boost IRS enforcement to bring approx $700 billion in tax revenue in the next 10 years. If the proposed plan is implemented, then it will be implied starting 2023.
It is most likely that the investors currently involved and invested in the cryptocurrency such as Dogecoin, Ether, and Bitcoin are not so happy with the announcement. With the increasing demand and trend, it is necessarily needed to be watched by the government.
However, it is still unknown if this industry guidance will bring any changes in general, which can be said the same for the other financial markets. Any further attempt to improve policies in the cryptocurrency can be taken as it will get legitimized in the upcoming days, months, or years. One thing people should surely notice that the proposed plans are only bestowing to change the plans, and they are not rules to be implemented immediately.
META- U.S. Treasury Department proposed plans for stricter measures for cryptocurrency compliance with IRS. Now the government will track the transactions.
Source :- U.S. Treasury Crypto Plan: New and Strict Cryptocurrency Compliance with IRS
https://techcrunch.com/2021/05/20/new-cryptocurrency-irs-rules-2023-crypto/
https://screenrant.com/us-treasury-crypto-plan-proposed-trading-changes-rules-explained/
