Biden Going After Crypto Tax Evaders with Data Sharing Initiative
President Biden’s administration is proposing global cooperation to curb the threat of crypto-related tax evaders.
To put a stop to crypto tax evasion, the Biden administration has suggested the collection of data related to foreign cryptocurrency investors that are active in the U.S. By increasing international cooperation on the subject of crypto tax evasion, the U.S. government is trying to make an attempt to minimize the burgeoning threat of tax evasion.
The new guideline would require crypto brokers, such as exchange platforms and hosted wallet providers, to provide necessary customer data to the IRS (Internal Revenue Service). The information required would be related to those foreign investors that indirectly hold accounts with the above-mentioned entities.
Numerous foreign individuals are currently using U.S-based platforms to make their trades.
Considering that the current laws related to cryptocurrencies are in their early stages in the U.S., there is a high probability that many earnings are going unreported.
If the proposal is accepted, the U.S. would be handing the information on these purchases to the respective foreign governments. In return, the U.S. would be receiving information on its own citizens that are dealing with cryptocurrencies abroad. At the moment, many Americans trade cryptocurrencies through foreign exchanges and wallets.
Previously, the IRS has made many efforts to ensure crypto investors stay compliant with tax rules. However, the new suggestion marks another major step in terms of ensuring compliance. Given that tax evasion is a recurring concern for governments worldwide, it would be interesting to see how they take to this idea.
The proposal would not only bring emphasis on the matter of accountability in the crypt space but will also reiterate the importance of staying compliant with tax rules. For any crypto platform that aims to avoid hefty non-compliance penalties, providing the required information would be the right way to go forward.