As the regulatory future of digital assets continues its path into uncharted territory, some influential senators have taken it upon themselves to give it a nudge in a sobering direction. Almost two years on from when the Infrastructure Investment and Jobs Act (IIJA) was signed into law by Joe Biden, high-profile Democrats, including Senators Elizabeth Warren and Bob Casey, are calling for the crypto reporting requirements within the bill to be stringently enforced.
In a joint letter to the IRS and Treasury Department, they urged the establishment of clear-cut tax reporting guidelines for digital asset “brokers”. They argue that these guidelines could help close the “crypto tax gap” – a staggering $50 billion expanse – and tackle “runaway tax evasion” across this burgeoning economy.
While the sentiment seems innocently legislative, it may be worth noting that the IRS and Treasury Department are yet to release long-awaited regulations scheduled for six months down the line, raising the eyebrows of crypto-enthusiasts and non-believers alike. This delay, if not addressed, places both agencies on shaky grounds for their impending implementation deadlines.
According to a cryptic 2022 analysis by Barclays, the crypto industry was found to pay less than half the taxes it should be. It even went as far as implicating that digital assets account for a tenth of all unpaid taxes. Yet, the estimate was labeled as “probably too small” due to the notorious anonymity of transaction recipients on the blockchain.
However, the Tax Law Center at New York University School of Law points out that new tax laws would allow crypto users to more easily file their taxes, giving the IRS a whiff of “large-scale tax cheats.” Over the next eight years, it is projected that these rules could generate an enticing $28 billion in tax revenue. Still, this doesn’t seem enough for our tenacious senators who warn of a potential $1.5 billion loss in tax revenue come 2024 if the rules are not implemented by year-end.
The deadline stirs up an atmosphere of urgency: “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. You must not give them that chance.”
Come August 15, the ticking timer will reach a midterm milestone, by which the Treasury is expected to clarify the implementation timeline for these regulations. Undoubtedly, the journey towards devising and implementing unerring crypto regulation is a test of tightrope stability and unbiased enforcement, teetering between safeguarding government revenue and stifling a revolutionary technological frontier.
Source: Cryptonews
