- The IRS commissioner has asked for extra tools and resources to track crypto tax dodgers
- Charles Rettig admitted that the IRS is struggling to adequately tax the crypto space, leaving a $1 trillion tax gap
- Rettig asked for a “clear dictate from Congress” to allow the IRS to do more to close the crypto tax gap
The U.S. Internal Revenue Service (IRS) commissioner Charles Rettig has called for greater resources and authority from Congress to tackle tax evasion using cryptocurrencies. Rettig was sitting before the Senate Finance Committee hearing yesterday when the subject of cryptocurrencies came up. Rettig expressed frustration that the IRS hasn’t been able to do more to tackle tax evasion using cryptocurrencies, claiming that the agency needs “a clear dictate from Congress” to collect data in order to close the $1 trillion tax gap that the IRS says exists, as well as more resources and tools to do so effectively.
IRS Has Attracted Criticism for Previous Approaches
The IRS has been heavily criticized for how it has handled cryptocurrency tax in the past, with their ham-fisted efforts reflecting the lack of knowledge and resources in dealing with a new asset class that they, presumably, thought was going to go away.
However, as Rettig told the Senate Finance Committee, the cryptocurrency market has instead grown hugely, reaching some $2 trillion at its peak in April, and with the huge gains made by many in the past 18 months the IRS estimates that there is some $1 trillion in unpaid tax it is owed.
More Tools and Resources Needed to Close Crypto Tax Gap
Rettig told the committee that “by design, most crypto virtual currencies are designed to stay off the radar screen” and as a result more tools and resources were needed to breach the trillion-dollar tax gap.
The IRS has already asked for permission to track all cryptocurrency transactions over $10,000 in much the same way as it does with regular bank transfers, something that was first mooted last year. This bill was put on hold by the new Biden administration but it seems that such an eventuality is almost inevitable, although quite how it will be policed is another matter.