IRS seeks funding increase to strengthen crypto oversight

The Internal Revenue Service (IRS) is counting on an increased budget for 2022. The agency also needs $32 million to expand tax administration capabilities in the cryptocurrency space and to combat cybercrime.

The agency plans to direct the funding to hiring external contractors and expanding staff in priority areas. It envisions the creation of a full internal dashboard for monitoring cryptocurrency blockchains.

“In combination with extensive data gathering, contractors will enable identification of cases of illicit activity related to cryptocurrencies that are of interest to the IRS. The specialists will begin work in the agency’s offices to provide subject-matter expertise.”, the document says.

In the previously published Green Book, the Biden administration made clear that cryptocurrency taxation efforts are aimed at narrowing the so-called tax gap. It refers to the difference between the amount of alleged taxpayer liabilities and the IRS’s actual tax take.

The IRS expects that such measures, together with the funding increase, will help shrink the tax gap.

According to The Block, American lawmakers are also working on a bill that would define cryptocurrency for tax purposes and establish a regulatory framework for sharing information about cryptocurrency transactions with regulators.

In the IRS budget for 2022 there are plans to create a single reporting form for brokers in the crypto space. Subsequently such an obligation would extend to bitcoin exchanges and custodians.

Measures to strengthen tax compliance include an obligation to report to the IRS information on cryptocurrency transactions worth more than $10,000.

Earlier, the Treasury proposed expanding the reporting requirements for brokers regarding cryptocurrencies. They would be required to pass information on account beneficiaries to the international information-sharing network, of which the United States is a member.

Follow ForkLog news on Facebook!