Republican senators recently said enough members of that group favor a bipartisan agreement to advance a $550 billion plan to shore up America’s ailing roads, bridges, and power grids.
In today’s contentious, borderline hostile political environment, it’s positive if not miraculous that both parties can agree on something, let alone an issue as important as infrastructure. However, it’s not all good news for cryptocurrency investors because they may bear some responsibility for funding the infrastructure package.
“The provisions would raise an additional $28 billion from cryptocurrency transactions, according to a summary of the plan. The proposal would impose more rules on crypto brokers to report transactions of digital assets, including virtual currencies, to the Internal Revenue Service,” reports Laura Davison for Bloomberg.
Adding to the potential burden is a proposal to require businesses to report all crypto transactions worth $10,000 or more. However, that’s not surprising because rules already stipulate that cash transactions at the same amount must be reported.
Keep An Eye Out
Still, the crypto tax proposal included in the infrastructure package is the latest sign that policymakers and the IRS itself are taking a more scrutinizing eye toward taxing digital assets.
“The proposal comes as IRS enforcement officials say that cryptocurrency is increasingly becoming an area for tax cheats to hide income from the federal government. The IRS in 2020 added a line about cryptocurrency on Form 1040, the individual tax return, to gain more visibility into virtual currency transactions,” according to Bloomberg.
Currently, the IRS treats bitcoin and other digital coins as property, meaning the asset class is subject to the same tax treatment as, say, equities and real estate.
The IRS is motivated to up the crypto tax collection effort. The agency estimates it misses out on $1 trillion tax collections annually, and some of that is attributable to folks parking cash in bitcoin and the like to avoid higher tax tabs. Crypto investors should note that courts appear to be on the side of the IRS in this matter.
“This spring, courts authorized the IRS to issue John Doe summonses to crypto exchange operators Kraken and Circle as a way to find individuals who conducted at least $20,000 of transactions in cryptocurrency from 2016 to 2020,” according to CNBC. “The IRS also put this same type of summons to use in 2016, when it went after Coinbase crypto transactions from 2013 to 2015.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.