US Lawmakers Blame Crypto Firms for ‘Tax Gap’ in Letter to Treasury
Two members of the United States Congress have penned a letter to the heads of the Treasury and the Internal Revenue Service, demanding the implementation of tax regulations for the crypto industry.
In a letter addressed to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, U.S. Representatives Brad Sherman and Stephen Lynch raised concerns about the compliance practices in crypto, stating:
“For years now, that (crypto) industry has been a major source of tax evasion and a significant part of the nation’s (United States) tax gap.”
The duo highlighted an audit report from September 2020, wherein the Treasury Inspector General for Tax Administration (TIGTA) pointed out the IRS’ inability to identify pro-crypto taxpayers owing to the lack of reporting.
In addition, the Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Bill) — signed into law by President Joe Biden in November 2021 — required taxpayers to report crypto transactions starting in 2023. However, the congresspeople said that “the proposed regulations have yet to be promulgated.”
Sherman and Lynch called for the prompt release of the proposed regulations to “close the tax gap and bring the cryptocurrency industry into full tax compliance.”
In May, the Biden administration renewed its push for a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners, which was first announced as part of Biden’s FY2024 budget in March 2023. However, the proposed crypto mining tax did not make it into the May legislation that addressed raising the U.S. debt ceiling.
While concerns around a 30% tax on crypto mining deflated, crypto proponents believe it to be a temporary arrangement. CoinMetrics co-founder Nic Carter believes that the administration would re-attempt the tax imposition into some omnibus bill in the future.