Congress should have clear authority to collect cryptocurrency payments

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Congress should have clear authority to collect cryptocurrency payments

Charles P. Rettig, commissioner of the Internal Revenue Service, arrives to testify during the Congressional Finance Committee The Fiscal Year 2022 Budget '' in Dirksen Senate Office Building in Washington, D.C. Tom Williams Pool via REUTERS.

Also on Tuesday, the Internal Revenue Service Commissioner Charles Rettig said that Congress needs to provide clear statutory authority for the tax agency to collect information on cryptocurrency transfers valued at over $10,000 that go unreported.

I think we need Congress authority, said Rettig in his testimony to the Senate Finance Committee. We get challenged frequently and to have a clear directive from Congress on the authority to collect this information is critical.

He said the cryptocurrency market capitalization was over $2 trillion, with more than 8,600 currencies globally, and by design, most crypto virtual currencies are designed to stay off of the radar screen.

The Biden administration has targeted commercial crypto assets for capital gains tax collections and to crack down on illegal use of such digital currencies, which have been increasingly demanded by perpetrators of ransomware attacks on corporate computer networks.

The 2017 fiscal 2022 proposals include a new requirement that cryptocurrency transfers of $10,000 or more be reported to the IRS in much the same way that banks report cash transfers of that amount and brokers report securities transactions to the IRS. The proposed change would start in 2023.

Rettig says the massive profits from the rise in crypto assets are escaping the IRS and contributing to a tax gap that he estimates at some $1 trillion annually - the difference between taxes already owed and what is collected.

The government has also proposed that the cash transfer reporting limit from $600 to $10,000 be reduced from the current $10,000, which the Republican Senator Mike Crapo criticized as causing a significant amount of privacy concerns.

Rettig said he did not advocate for the proposal, but that combined with modernized computer system, the IRS would help determine which taxpayers not to target in the audits as the agency wants to focus on higher-wealth individuals who are more susceptible to tax evasion.

Regarding a report in ProPublica examining what it called a vast trove of Internal Revenue Service data on the taxes of some of the wealthiest Americans, Rettig said that an investigation into any potential disclosure breach was underway.

I can't speak to any tax burden in particular. If he can confirm that there is an investigation there will be an inquiry into the allegations that the source of the information in the article came from the Internal Revenue Service, he said.

He said that the agency is governed by strong oversight from the Treasury Inspector General for Tax Administration, the Government Accountability Office and the IRS Taxpayer Advocate.

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