There’s no escaping the crypto tax! U.S. Treasury Department Proposes Expanding Cryptocurrency Tax Reporting Requirements

With overseas information sharing + lower amount of account information reporting, the Biden administration may make crypto tax evasion invisible.

Taxing the Rich, $80 Billion “Armed” to Tax Agencies …. The U.S. government certainly won’t let go of the giant prey of encryption tax.

On May 28, the Biden administration released its budget proposal for 2022. In addition to the new budget, the U.S. Treasury Department also released an explanatory document on the government’s revenue proposal.

There's no escaping the crypto tax! U.S. Treasury Department Proposes Expanding Cryptocurrency Tax Reporting Requirements

In addition to macro goals aimed at closing tax loopholes and expanding the Internal Revenue Service (IRS), the Treasury Department focused on combating crypto offshore tax evasion by issuing reporting requirements for crypto asset brokers, including exchanges, related to potential beneficial ownership (beneficial ownership).

A substantial beneficial owner is a person who has an ownership interest in property despite the fact that the property is owned by another name. Anyone who has substantial control can be called a substantial beneficiary, independent of the formal legal relationship. For example, publicly traded securities are usually registered in the name of a broker for security and convenience purposes.

There's no escaping the crypto tax! U.S. Treasury Department Proposes Expanding Cryptocurrency Tax Reporting Requirements

In response, the Treasury Department explained, “Tax evasion using crypto assets is a rapidly growing problem.” “The globalized nature of the crypto market provides opportunities for U.S. taxpayers to use offshore crypto exchanges and wallet providers to conceal assets and taxable income.”

The Treasury Department is proposing to expand the requirements for cryptocurrency brokers (including exchanges and hosted wallets) to report the substantial beneficiaries of accounts, which would then be included in an automated international reporting network. The proposed change would allow information to be shared between the U.S. and different jurisdictions within the cooperative network, thereby “expanding the scope of information reporting by brokers,” a mandatory requirement the proposal hopes to implement starting with tax returns in 2023.

The proposal is outlined as follows.

“The proposal would expand information reporting by cryptoasset brokers to include certain substantial beneficiaries of account entities. This would enable the United States to automatically share such information with appropriate partner jurisdictions for the purpose of exchanging information with each other regarding U.S. taxpayers that engage in transactions in cryptoassets outside the United States, either directly or through passive entities, under the global automated information exchange framework. The proposal would require brokers (including entities such as U.S. cryptoasset exchanges and custodial wallet providers) to report information relating to such passive entities and their principal foreign owners in conjunction with the cryptoassets held by those entities in the broker’s account. The proposal, if adopted and combined with existing law, would require broker-dealers to report gross receipts and such information as Treasury may require with respect to sales of cryptoassets to relevant customers and, for certain passive entities, their principal foreign owners.”

The 2022 budget also includes a number of other crypto reporting requirements.

Also for tax compliance purposes, a proposal to introduce an “integrated financial account reporting” structure would require financial institutions to report user account data and detail different types of transfers above a $600 threshold.

This would include crypto-asset exchanges and custodians, the paper said.

The proposal reads, “In addition, reporting requirements would apply in cases where a taxpayer purchases crypto assets from one broker and then transfers them to another broker, and businesses that acquire crypto assets in transactions with a fair market value in excess of $10,000 would be required to report such transactions.”

About a week ago, the Treasury Department proposed that financial institutions and businesses would need to report cryptocurrency transfers over $10,000 to the IRS.

With overseas information sharing + lower amounts of account information reporting, the Biden administration may make crypto tax evasion invisible.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/theres-no-escaping-the-crypto-tax-u-s-treasury-department-proposes-expanding-cryptocurrency-tax-reporting-requirements/
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