The US Treasury said the Biden administration’s proposal to strengthen tax compliance includes a requirement for transfers of at least $10,000 of cryptocurrency to be reported to the Internal Revenue Service.
“As with cash transactions, businesses that receive cryptoassets with a fair-market value of more than $10,000 would also be reported on,” the Treasury Department said in a report on tax-enforcement proposals released on Thursday.
The Treasury said that comprehensive reporting is necessary “to minimise the incentives and opportunity to shift income out of the new information reporting regime”. It noted that cryptocurrency is a small share of current business transactions.
Bitcoin pared a rebound from Wedndesay’s rout on the IRS announcement, which shaved about $3,000 from the token’s price. It traded higher by 3 per cent near $39,000 as of 12.33pm in New York. Cryptocurrency-linked stocks like Coinbase and MicroStrategy also reversed their gains.
The IRS in 2020 added a line about cryptocurrency on the Form 1040, the individual tax return, in an effort to gain more visibility into virtual currency transactions.
President Joe Biden’s administration is also calling for banks to report on account flows to help boost tax-payment compliance.
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury said.