The US government wants businesses and individuals to operate cryptocurrency transactions above $10,000 to the Internal Revenue Service (IRS).
The United States Treasury Department has proposed a new tax law that would capture several sectors, including the cryptocurrency space. The new tax proposal would demand businesses treat cryptocurrencies as cash when it comes to reporting them for tax purposes.
According to the proposal rolled out by the US Treasury, businesses and individuals living in the US will have to report cryptocurrency transactions worth $10,000 or more to the IRS. “As with cash transactions, businesses that receive cryptoassets with a fair market value of more than $10,000 would also be reported on,” the report said.
Per the report, the US Treasury is concerned that the government is facing tough challenges with cryptocurrencies as they are being used for illegal activities, including tax evasion. However, the government agency stated that businesses and individuals can avoid paying their taxes because the IRS is yet to catch up with modern technology.
´This is because the IRS operates outdated systems and lacks the ability to fully take advantage of the benefits of more modern technology due to its resource constraints,” the US Treasury added. The government body said they could no longer ignore the cryptocurrency market, which has grown to reach a market cap of over $2 trillion.
The crypto market has experienced massive growth over the past few years. As such, governments in various parts of the globe are finding ways to ensure that crypto traders and investors report their earnings and pay their taxes.
In recent months, the IRS has been going after crypto traders and investors who failed to report their earnings and pay their taxes. The tax agency received court orders to obtain customer information from cryptocurrency trading platforms Kraken and Circle. According to the IRS, the crypto exchanges haven’t done anything wrong, but customers who made huge profits from the crypto market and failed to report it will be tracked down and forced to do so.