The US Treasury Department has proposed obliging cryptoasset brokers to comply with new reporting requirements for basic beneficial ownership to combat offshore tax evasion.
Late last week, the administration of US President Joe Biden released its budget proposal for 2022. Along with the new budget, the Ministry of Finance has published clarifications to the administration’s revenue proposals. The Ministry of Finance proposed expanding the requirements for cryptocurrency reporting to combat tax evasion.
“Tax evasion using cryptoassets is a rapidly growing problem,” the Finance Ministry said in an explanation. “The global nature of the cryptocurrency market enables US taxpayers to hide assets and taxable profits through offshore cryptocurrency exchanges and wallet providers.”
The US Treasury Department is proposing to expand reporting requirements for cryptocurrency brokers, including cryptocurrency exchanges and custodian wallets, and oblige them to report beneficial owners of accounts. This data will then be transferred to automated international reporting networks that include the United States. According to the proposal, these requirements should become mandatory for tax returns filed starting in 2023.
“This will allow the United States to exchange such information on an automatic basis with the appropriate partner jurisdictions to obtain information about US taxpayers who, directly or through passive organizations, participate in transactions with cryptoassets outside the United States,” the Treasury said in the proposal.
Cryptocurrency exchanges operating in the United States now store information about their customers. Apparently, with the help of the new rule, the Ministry of Finance wants to ensure the exchange of this information between exchanges at the international level.
Late last year, the Financial Crimes Enforcement Network (FinCEN) proposed requiring banks and financial institutions to report transactions from any cryptocurrency wallet. However, due to the departure of the administration of the previous US President Donald Trump, consideration of the rule was postponed.
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