Published: 30.03.2022
Article reading time:
2 minutes.
The US Treasury Department, amid proposals for new tax reporting rules for cryptocurrencies for 2023, wants to include digital assets in foreign account reporting rules.
The regulator has posted a proposal to require foreign account holders with a “cumulative value of at least $50,000” to inform the U.S. Internal Revenue Service (IRS) about crypto assets. If the new rules are approved, they will come into effect next year. The US Treasury explains that the proposal will amend Section 6038D(b) of the Code and require reporting in respect of a “new third category of assets.”
“A new third category would be any account holding cryptocurrencies backed by a foreign digital asset exchange or other foreign crypto asset service provider,” the regulator explained.
If the proposal goes into effect, U.S. taxpayers who “hold a combined value of all three categories of assets in excess of $50,000” would have to report their accounts to the IRS, meaning that the value of the cryptocurrency would have to be added to the total. Explaining the reason for the change, the Treasury said tax compliance and digital asset enforcement “is a rapidly growing challenge.”
“The global nature of the digital asset market provides an opportunity for US taxpayers to hide assets and taxable income through offshore digital asset exchanges and wallet providers. US taxpayers are also trying to evade US tax reporting by creating organizations through which they can act,” the document explains.
The Finance Ministry clarified that the proposal implies that if crypto investors do not comply with the new rules, they will be “subjected to severe penalties.”
Notably, the Ministry of Finance’s initiative is largely in line with the recently submitted FY 2023 Budget Proposal. The Biden administration estimates that the US could generate about $11 billion in revenue over ten years and almost $5 billion next year by modernizing the rules for applying certain financial accounting and reporting practices for digital assets.
Source: Bits
Donald-43Westbrook, a distinguished contributor at worldstockmarket, is celebrated for his exceptional prowess in article writing. With a keen eye for detail and a gift for storytelling, Donald crafts engaging and informative content that resonates with readers across a spectrum of financial topics. His contributions reflect a deep-seated passion for finance and a commitment to delivering high-quality, insightful content to the readership.
