The American Families Plan seeks to bring crypto transactions into the open as part of a $80 billion push to modernize the IRS’s auditing capabilities.
The US Treasury published a comprehensive study on Thursday detailing proposed modifications to the Internal Revenue Service’s reporting requirements, as outlined in the American Families Plan by Joe Biden administration. Along with many other reforms aimed at increasing income, improving efficiency, and establishing a more fair tax system, the law contains new regulations for reporting cryptocurrency exchanges such as Bitcoin.
To be precise, if the measure becomes law, you will be required to disclose such transactions to the IRS if they reach $10,000 – the same reporting level as cash deposits. The Treasury Department asserts that the measure will assist in combating tax evasion and other crimes.
The Treasury study said that cryptocurrency already presents a major detection challenge since it facilitates criminal behaviour in general, including tax avoidance and this is why the President’s plan funds the IRS to combat the development of crypto assets.
The measure is part of an $80 billion initiative under the American Families Plan to strengthen the IRS’s auditing capabilities, which administration officials estimate may produce up to $700 billion in revenue in the next ten years to come. The Treasury says that although cryptocurrencies now account for a relatively modest percentage of company revenue, they are projected to grow in significance over the coming decade.
The study asserted that cryptocurrencies and crypto asset exchange accounts, as well as payment service accounts that take cryptocurrencies, would be included under the new financial account reporting system. Additionally, similar to cash transactions, companies that receive crypto assets with a fair market value greater than $10,000 will be disclosed.
It further said that such extensive reporting is essential to mitigate the incentives and opportunities for revenue to be diverted away from the new information reporting regime.
The Biden Government’s American Families Plan, which was unveiled on April 28, includes about 1 trillion US Dollars in new investments and 800 billion US Dollars in tax cuts.