The cryptocurrency market has been growing steadily over the past few years, and revenue-generating agencies are clamping down on investors and traders to properly report their crypto earnings. The IRS is now encouraging the US Congress to implement crypto reporting standards to make it easier for them to work.
IRS wants Congress to set crypto reporting standards
Internal Revenue Service (IRS) Commissioner Charles Rettig has urged the United States Congress to set reporting requirements for cryptocurrency. He believes this act could help close the tax gap in the emerging market.
Rettig made the statement during a Senate Finance Committee hearing yesterday. Senator Rob Portman (R-OH) asked Rettig’s opinion on the issue, adding that he was drafting a bill that would set crypto tax reporting requirements.
Portman stated: “We’re working on a cryptocurrency bill that would define cryptocurrency for tax purposes and try to provide appropriate reporting rules.” Rettig replied that such a bill would help close the tax gap or the amount of income tax cryptocurrency traders and investors have yet to pay to the IRS.
The most recent tax gap estimate covers the years 2011, 2012 and 2013, and reveals that the net tax gap is close to $400 billion after enforcement actions and late payments. According to Rettig, the problem lies in visibility.
He highlighted that the cryptocurrency space is moving so fast that Portman’s bill needs to touch on various areas in order to be effective. “We could give you a lot of guidance with areas we see in respect to the crypto world, it’s replicating itself constantly,” Rettig added.
However, Portman’s bill is still in development, and the senator revealed that he wants it to be bipartisan in its scope.
Authorities continue to struggle with the crypto space
The cryptocurrency space has progressed so rapidely over the past decade that regulatory and tax agencies have found it difficult to keep up. Another issue is that most regulators still struggle to understand cryptocurrency technology.
However, several countries are working toward providing adequate regulatory and tax frameworks that cover cryptocurrencies.