IRS Commissioner Charles Rettig emphasised that most digital currencies are designed to “stay off the radar screen”
The United States Internal Revenue Service (IRS) Commissioner Charles Rettig stated that Congress should provide more clarity on collecting information for cryptocurrency transfers valued at over $10,000.
In a hearing before the Senate Finance Committee, IRS Commissioner Charles Rettig sought explicit congressional authority to regulate cryptocurrencies.
Commissioner Charles Rettig emphasised that most digital currencies are designed to “stay off the radar screen,” and therefore, the IRS would be challenged.
With the cryptocurrency market capitalisation over $2 trillion and over 8,600 exchanges worldwide, Rettig stated that there had been many obstacles.
He said: We get challenged frequently, and to have a clear dictate from Congress on the authority for us to collect that information is critical.
The Commissioner estimates that the tax gap – the difference between taxes legally owed and collected – is at around $1 trillion a year and that massive profits from the surge in cryptocurrency prices have escaped the IRS.
He added: The IRS currently issues summonses to third parties to get information on cryptocurrency users, without naming specific individuals. It is also active in both civil and criminal enforcement, but the agency needs additional tools and resources from Congress.
The Biden administration is recently called for banks and crypto exchanges to report crypto transactions over $10,000 to the IRS to reduce the tax gap. The Treasury is cracking down on tax evasion involving the new asset class as part of the president’s compliance measures.
Following Republican Senator Mike Crapo’s criticism of the reporting limit citing privacy concerns, the Treasury has proposed reducing the threshold to $600 from $10,000.
The proposal, along with modernised computer systems, could aid the IRS in determining which taxpayers not to target for audits, as the agency would prefer to target wealthier individuals who are more prone to tax evasion.
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