IRS Taps Binance.US, TaxBit Execs to Strengthen Crypto Tax Regulation Efforts

Shalini Nagarajan
Last updated: | 1 min read
Source: Midjourney

The Internal Revenue Service (IRS) said on Tuesday that it hired two crypto industry executives to aid in digital asset reporting, compliance, and enforcement programs.

They include Sulolit “Raj” Mukherjee, formerly the global head of tax at ConsenSys and Binance.US. Mukherjee also has prior experience at Coinbase and the Blockchain Association. The other executive, Seth Wilks, previously served as vice president of government relations at crypto tax software firm TaxBit.

“This is a complex and evolving sector that has major tax administration implications,” IRS Commissioner Danny Werfel said in a statement.

“It’s important we get this right for taxpayers and the nation. Pulling in expertise from the private sector to work with the IRS team is critical to successfully building the agency’s efforts involving digital assets and helping us do it in a way that works well for everyone.”

IRS Highlights Growth in Crypto Tax Investigations

In its annual report for Oct. 2022 to Sept. 2023, the IRS noted a rise in digital asset tax investigations. This involved unreported income from capital gains on crypto sales, crypto mining earnings, and crypto-based income like wages and rental income.

As part of its efforts to enhance enforcement, the tax regulator is currently finalizing new rules. These would require crypto brokers, including exchanges, to provide transaction details of their clients to the US government.

It is also ramping up taxpayer service improvements, tech enhancements, and enforcement efforts, particularly in affluent areas with compliance concerns, the IRS said. It will focus on digital assets, including initiatives such as the John Doe summons and proposed regulations for broker reporting.

New IRS Rules Mandate Personal Data Disclosure by Crypto Brokers

The proposed rule, released Aug. 2023, suggests defining digital asset “brokers” as trading platforms, payment processors, certain wallet providers, and individuals offering redemption services for their own digital assets.

According to the proposed regulations, crypto brokers would be required to follow the same guidelines as securities brokers. This includes submitting information returns and providing payee statements for all customers and traders.

From Jan. 1, new IRS rules require crypto brokers to disclose personal information on digital asset transactions over $10,000 within 15 days. Despite aiming to boost transparency and combat tax evasion, these regulations have faced criticism for their ambiguity and compliance challenges.