US IRS asks for increased funding to strengthen oversight in the cryptosphere

June 9, 2021

US IRS asks for increased funding to strengthen oversight in the cryptosphere

The US Internal Revenue Service (IRS) is expecting a budget increase for 2022. Among other things, the agency needs $32 million to expand its cryptocurrency tax administration capabilities and combat cybercrime.

The agency expects to use the funding to outsource and add specialist staff in priority areas. A full internal cryptocurrency blockchain monitoring dashboard is envisaged.

"In conjunction with extensive intelligence gathering, contractors will ensure the identification of illegal cryptocurrency-related activity of interest to the IRS. Specialists will start working in the service's office to provide subject matter expertise," the document said.

In an earlier green paper, the Biden administration made it clear that efforts to tax cryptocurrencies are aimed at reducing the so-called tax gap. It refers to the difference between the amount of taxpayers' estimated liabilities and the actual amount collected by the IRS in taxes.

The IRS expects that such measures, together with increased funding, will narrow the tax gap.

According to The Block, US lawmakers are also working on a bill that would define cryptocurrency for tax purposes and create a regulatory framework for reporting cryptocurrency transactions to regulators.

The IRS's 2022 budget talks of plans for the service to create a single reporting form for cryptocurrency brokers. Bitcoin exchanges and custodians will subsequently be subject to this obligation.

Recall that the measures to strengthen tax compliance include an obligation to report cryptocurrency transactions of $10,000 or more to the IRS.

Earlier, the Ministry of Finance proposed expanding the reporting requirements for cryptocurrency brokers. They would be required to report account beneficiary information to an international information exchange network of which the US is a member.

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Hi there, my name is Zalman Weinberg. I'm enthusiast with over 7 years of experience in cryptocurrencies and blockchain. Professional Trader providing Blockchain solutions to Startups and Enterprises. Expert in all cryptocurrency exchange APIs (BitMEX, Bittrex, Binance, Bitfinex, Kraken, Poloniex, Gdax etc.). I have also worked with multiple Forex broker APIs.

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