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Growing Cryptocurrency Popularity Presents Serious Tax Evasion Threat

Cryptocurrency & Tax Evasion: The Biden Administration Is Proposing Stronger Reporting Requirements

Cryptocurrency is quickly becoming a hot topic in the news. Business leaders and politicians are commenting on its rise and fall, its place in the economy, and – occasionally – on the security risks posed by the virtual currency. The IRS is also becoming a part of the conversation, with the agency taking more measures to increase tax enforcement of this increasingly valuable asset.

Cryptocurrency & Tax Evasion: The Biden Administration Is Proposing Stronger Reporting Requirements

Cryptocurrencies like Bitcoin and Dogecoin are used by some people as a way to hide assets and to avoid tax obligations. Collectively, virtual currency is valued at about $2 trillion, and that value is likely to rise as the currency becomes more widely used.

The Treasury Department estimates that there will be a $7 trillion tax gap over the next 10 years – the difference between how much tax is collected and how much tax is owed – in large part because people are not paying what they owe on their cryptocurrency holdings. The Biden Administration wants to change all that.

As part of a new tax agenda, the Biden administration is proposing stronger reporting requirements for cryptocurrency, including requiring businesses to submit a report to the IRS when they receive more than $10,000 in virtual currency (which is the current rule for cash transactions). Another threshold would be introduced for crypto transactions for financial institutions, digital asset exchanges (where cryptocurrency is bought and sold), and payment settlement entities.
One reason that the IRS says it has been so hard to enforce taxes on virtual currencies is that these transactions cannot always be tracked. Not all currency exchanges report these transactions. Cryptocurrency can also be traded outside the exchanges.

If the newest proposals are passed by Congress, the Biden Administration estimates that approximately $700 billion in revenue would be raised in the first 10 years, and another $1.6 trillion would be raised in the following 10 years.

If the proposals are passed, it will also mean that a lot of people who were not paying taxes on their cryptocurrency will need to start paying. It may also mean that some people who were not paying will be charged penalties.
 

Call An Experienced Tax Law Firm In Phoenix, AZ

 
Now is the time to start getting your taxes in order if you own cryptocurrency. Talk to one of the experienced tax attorneys at Silver Law PLC to determine what you can do to get into compliance now or to start making changes in anticipation of the new regulations. We can help determine the best ways to avoid or minimize penalty. We serve clients throughout the Phoenix area. Contact us now to schedule a consultation with one of our experienced tax lawyers to learn more about your options.

  

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