In a move echoing the frustration of many Americans, Senators Elizabeth Warren, Bernie Sanders, Richard Blumenthal, and Bob Casey are urging federal regulators to expedite the enforcement of tax rules for cryptocurrency traders. It’s high time to break the inertia of nearly two years since Congress laid down new regulations on the notoriously nebulous world of crypto taxes.
A chilling assessment reveals that crypto brokers may be eluding more than half of their due tax responsibilities. This clandestine trend contributes to a tax gap estimated to be a staggering $50 billion, thanks to crypto tax dodgers. The fact that our government is leaving this substantial sum uncollected is mind-boggling and an affront to taxpayers abiding by the rules.
In their recent missive to federal regulators, these progressive senators highlighted the shocking delay in the implementation of reporting rules laid down by the 2021 Infrastructure Investment and Jobs Act. The Treasury Department and Internal Revenue Service (IRS) have dilly-dallied despite the congressional deadline to set the rules in motion by the close of this year. Such a holdup in tax regulations of this magnitude is anything but standard procedure.
The Senators minced no words in their message, stating, “If your agencies fail to implement the new crypto tax reporting rules by December 31, 2023 — the deadline established by Congress — you will risk losing an estimated $1.5 billion in tax revenue in 2024. This is an unacceptable outcome.” They further warned that failure to bridge the crypto tax gap could mean a potential loss of nearly $28 billion over the next eight years.
The anonymized nature of most cryptocurrency exchanges creates a massive challenge for the IRS to pin down tax evasion. Government watchdogs have warned that the more time passes without enforcing these rules, the wider the window for large crypto traders to dodge their tax duties.
Pending regulations, when implemented, would mandate third-party platforms like Coinbase to disclose information about individuals’ crypto trades, including gains and losses, to the IRS. President Joe Biden is on board with this movement, expressing his commitment to clamp down on crypto tax dodgers who exploit these loopholes to squirrel away their wealth.
It’s high time for these regulations to descend upon an industry riddled with fraud and corruption. These progressive lawmakers are fighting for fairness, taking aim at money laundering, fraud, and illegal activities facilitated by the crypto ecosystem. Let’s hope the regulators heed this clarion call.