On Thursday, U.S. President Joe Biden provided details on how the administration plans to generate an additional $700 billion USD in revenue from tax collection. Businesses will need to report on cryptocurrency transactions over $10,000.
According to a recent report released by the Biden administration, the U.S. will upgrade the capabilities of the IRS in effectively stifling tax evasion and bring some standardisation to the laws regarding cryptocurrency reporting for businesses.
As the crypto market reached $2 trillion USD earlier this year, which seems to be turning some heads until the recent crash, more attention has been given to crypto.
Some proposed measures are aimed at cryptocurrency, including a requirement that crypto exchanges report gross receipts and purchases. It also calls for businesses receiving crypto to report on transactions larger than $10,000 from 2023 — a standard that already exists for cash transactions.
This is good news in a bad week for crypto. The U.S. government essentially just admitted crypto is here to stay, and now they are making policies and laws to help with the regulation thereof.
More Power To The IRS
The IRS will be provided with additional resources in order to combat advanced methods of tax evasion, since “Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,”. The IRS will also be allowed to access more information through “Financial institutions would add information about total account outflows and inflows to existing reporting on bank accounts” and “The reporting regime would also cover foreign financial institutions and crypto asset exchanges and custodians.”
The IRS still relies on Individualand Business File Systems that date back to the 1960s—the oldest in the federal government. The result is decades upon decades of tax administration built upon a system that is written in a programming language that is no longer taught, and where
new functions are added in a patchwork rather than integrated mannerThe American Families Plan Tax Compliance Agenda
The Biden administration wants to give the I.R.S. $80 billion over the next decade for technological upgrades and to increase staff with specialised expertise in the required areas. The report also states that the IRS’s outdated technology currently combats around 1.4 billion cyberattacks yearly and is in need of dire upgrades. These upgrades aren’t just for catching the baddies, this work can also “help avoid unnecessary, costly and burdensome audits of compliant taxpayers.”
Standards For CBDC’s
The Fed admits that Distributed Ledger Technology (DLT) and crypto are changing the world, and it is important to understand and be ready for these changes in the financial system. They have also acknowledged they are experimenting with a Central Bank Digital Currency (CBDC), but it will not replace current forms of settlement.
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