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The implementation of a law designed to track down cryptocurrency tax evaders is delayed within the U.S. Treasury Department, thereby placing billions of dollars in federal revenue in jeopardy, reports the Wall Street Journal (WSJ). This has triggered frustration within the ranks of the President’s party, including Senator Elizabeth Warren (D., Mass.) and three other senators who are now stressing the Biden administration to expedite the process.
Biden Administration Under Pressure To Bring Crypto Rules
Initially planned for the current tax year, the enforcement of the 2021 law is now uncertain for even the 2024 tax year due to continuous delays. The law, aiming to close loopholes allowing crypto investors to evade taxes, was predicted to generate an additional $28 billion in federal revenue over a decade.
“Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government. You must not give them that chance,” wrote Senators Warren, Bob Casey (D. Pa.), Richard Blumenthal (D., Conn.), and Bernie Sanders (I., Vt.) in a recent letter to Treasury officials.
Little action has been made since the Internal Revenue Service (IRS) and the Treasury Department clarified that brokers would not be obliged to report any information until final rules were released. Treasury has not yet made the official move of releasing a proposal.
Also Read: Odds Of Spot Bitcoin ETF Approval By US SEC Rises To 65% – Bloomberg
Why Is The Regulation Needed?
The regulations would provide the IRS with enhanced information about cryptocurrency investors’ profits, notifying investors that the IRS is aware of their earnings. According to tax lawyer James Creech, these measures would also make tax compliance simpler for crypto investors and could help standardize the industry.
Nevertheless, the delayed tax regulation forms part of a broader dispute in the crypto industry’s lobbying efforts. Crypto firms and venture capitalists argue that digital tokens and the underlying blockchain technology merit different treatment from traditional finance. Consequently, they have invested significantly in political campaigns and lobbied Congress for special provisions for their businesses.
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