Cryptocurrency brokers are shirking their obligations to tax authorities, experts say — and four key senators, led by Sen. Elizabeth Warren (D-Massachusetts), have warned that this could lead to a staggering $50 billion government tax gap. They’ve urged federal regulators to promulgate rules that stamp out cryptocurrency-associated tax evasion by the end of this year.
Analysts at Barclays estimated that the unreported crypto-related taxes amount to around $50 billion, rendering it a whopping 10 percent of the national income gap—that is, the amount that is supposed to be paid in taxes but end up unpaid.
As an added challenge, almost all cryptocurrency transactions are anonymized and thus make it difficult for the IRS to uncover unpaid taxes. Accordingly, Sen. Warren along with her coworkers—Bob Casey (D-Pennsylvania), Richard Blumenthal (D-Connecticut), and Bernie Sanders (I-Vermont) — explained in their letter that a swift initiative on regulations would lessen tax evasion as, when impeded, taxpayers would find it difficult to byposs.
As part of the Infrastructure Investment and Jobs Act 2021, the Treasury Department and Internal Revenue Service (IRS) are obliged to report setups for crypto trading activity that abridges gaps across the crypto taxation space. President Joe Biden anted up measures to harsh dealings done in cryptomarkets: leakers using crypto schemes to dodge payments to taxes.
Sen. Warren reiterated the requirement in a statement, detailing that any policy considerations should include concrete rules intended to hinder formations of weapons trading, lying, and various other types of fraud common in the cryptocurrency domain.
