Biden Seeks to Expand Information Reporting on Cryptocurrencies

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Blog by Wendy Klein CPA Professional Corporation

The Biden administration wants to expand information reporting for financial institutions to better capture exchanges of cryptocurrency transactions.

In a report issued May 20, the Treasury Department said President Biden will propose requiring virtual currency transactions of more than $10,000 to be reported to the IRS “to minimize the incentives and opportunity to shift income.”

The proposal would apply to businesses that receive virtual currencies, as well as any cryptoasset exchange accounts or payment service accounts that receive assets with a fair market value in excess of $10,000.

“Despite constituting a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade, especially in the presence of a broad-based financial account reporting regime,” the report said.

Treasury said compliance rates exceed 95 percent when the IRS can verify taxpayer filings with third-party information reports, but compliance drops below 50 percent without third-party reporting.

The proposal is part of a broader effort to gain $80 billion in more funding for the IRS to expand its enforcement capabilities over the next 10 years.

Treasury also said it hopes to grow its workforce by no more than 10 percent a year to keep hiring manageable, while also investing in more modern technology and data analytics.