Democratic Senators Elizabeth Warren (D-Mass.), Bob Casey (D-Pa.), and Richard Blumenthal (D-Conn.) have teamed up with Bernie Sanders (I-Vt.) to push for the timely implementation of cryptocurrency tax reporting regulations. In a letter addressed to the chiefs of the Treasury and the Internal Revenue Service (IRS), the senators expressed concern that time was running out to announce the new rules.
The urgency stems from the mandates included in the $1.2 trillion infrastructure bill, which the Senate approved in August 2021. This legislation expanded tax reporting requirements for corporations acting as “brokers” in the cryptocurrency space. While the White House completed its study of the regulations in May following the bill’s enactment, the Treasury and IRS have yet to issue the guidelines set to take effect later this year.
The senators assert that the delay in publishing the draft guidelines hinders closing a significant financial gap caused by cryptocurrency tax evaders. They argue that the current system loses millions of dollars in tax revenue annually due to individuals and entities failing to report their crypto earnings. The proposed guidelines address this issue by demanding more comprehensive reporting of crypto transactions.
According to their research, the senators estimate that tax evaders may deprive the IRS of at least $50 billion annually, possibly even more. They express concern that without swift action, these individuals, and intermediaries willing to assist them, will continue to exploit loopholes and evade taxes, ultimately siphoning billions of dollars from the U.S. government.
The senators make a compelling case for the immediate implementation of the regulations, emphasizing the need to prevent further revenue loss and ensure a fair tax system for all citizens. Their plea is based on fiscal responsibility and the principles of equity and transparency in tax reporting.
The ball now lies in the court of the Treasury and the IRS, who must act promptly to publish the much-needed guidelines to enforce cryptocurrency tax reporting. Failure to do so could perpetuate a situation where tax evaders continue to game the system, adversely impacting the government’s finances. Consequently, the onus is on the agencies to ensure the regulations are in place within the stipulated timeframe, as these senators demand.
