The US government has recently released its “Greenbook” of revenue proposals in which it has stated its aim to collect data on foreign crypto investors who are operating in the US. The move is part of a broader global move to eradicate tax evasion.
Bloomberg reported yesterday that the move will require the likes of exchanges and wallet providers to provide information to the IRS on foreigners who have accounts with them.
The proposal comes as more and more global concern is voiced over the possible tax gap between taxes owed and the taxes that are being paid on time. IRS Commissioner Charles Rettig has estimated that this gap may amount to more than $1 trillion a year.
The US government is hoping to uncover this perceived “blind spot”, whereby foreign cryptocurrency investors are operating in the US without declaring their gains to the tax authorities in the countries where they are domiciled.
The US would then provide this information to their counterparts in other countries, and in exchange receive information on their own citizens who may be using offshore exchanges and wallets to evade the payment of tax in the US.
The Biden administration is to push for congressional legislation to enable it to bolster its tax enforcement and allow the IRS to engage with its counterparts across the globe.
The Criminal Investigation division of the IRS is already working with tax agencies in other countries, which include Australia, Canada, UK, and Netherlands, to bring tax dodgers to justice, including those who are making undeclared gains in cryptocurrencies.
The Greenbook proposal states:
“The global nature of the crypto market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore crypto exchanges and wallet providers,”
The proposal would require that financial institutions would have to report all transactions to and from foreign accounts, and would entail that these institutions provide this information for business and personal accounts above a threshold of $600.
A further part of the proposal would see financial entities having to report the purchase of cryptocurrency from one broker, and its transfer to another. Finally, businesses that receive cryptocurrency worth more than $10,000 would have to report this to the IRS.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.