Biden’s Crypto Tax Evasion Crackdown Could Also Hit Non-US Traders
The American President Joe Biden appears ready to go to war with tax evaders, particularly those seeking to make use of crypto – and has put forward a plan that could hit crypto traders outside the United States, as well as domestic users.
In a set of Treasury proposals released last week, the department called “tax evasion using cryptoassets” a “rapidly growing problem.”
The department wrote:
“Since the industry is entirely digital, taxpayers can transact with offshore crypto exchanges and wallet providers without leaving the United States. The global nature of the crypto market offers opportunities for US taxpayers to conceal assets and taxable income by using offshore crypto exchanges and wallet providers.”
The Treasury has proposed to remedy this by forcing America-based crypto “brokers,” namely exchanges and wallet providers, to pass on information to the Internal Revenue Service (IRS), the nation’s top tax body, on foreign customers that indirectly hold accounts on their platforms.
The idea, it appears, would be to create a global network of tax bodies that shares information about overseas crypto tax evasion. The IRS would share its data with overseas governments – expecting to receive data on Americans hiding crypto on exchanges and wallet providers abroad in exchange.
The Treasury wrote:
“In order to ensure that the United States is able to benefit from a global automatic exchange of information framework with respect to offshore crypto assets and receive information about US beneficial owners it is essential that the United States reciprocally provide information on foreign beneficial owners of certain entities transacting in cryptoassets with American brokers.”
Bloomberg quoted Jorge Castro, a tax attorney at Miller & Chevalier Chartered and a former IRS employee as stating that the government “clearly feels that right now there’s a blind spot for foreign owners.”
And while the Treasury – which is on the lookout for new revenue streams to pay for a massive Biden-led public spending program – is hopeful of gaining the necessary legislative approvals for its move by 2023, Castro warned that the timeframe was “ambitious.”
The same media outlet quoted Evan Fox, a director at the American accounting and advisory firm Marcum, as stating that the new proposals “validate” crypto as an asset class, something that “many in the industry see as a good thing.”
“They’re really looking to gather as much information on the purchase, sale and movement of digital assets as possible.”