A Republican legislator from Ohio is drafting a law that is supposed to prevent US citizens from evading taxes on their cryptocurrency income.
In an interview with Squawk Box on CNBC today, Senator Rob Portman said he hopes to introduce a two-party bill after the next recess in Congress that will address the problem of many tax-exempt US cryptocurrency users. The senator said lawmakers “have not yet finalized the bill” and are “still gathering information” on the issue. However, he has claimed that both Republicans and Democrats are interested in reducing the tax gap for cryptocurrencies.
“The idea is to have better information about cryptocurrency and better define it for tax purposes,” said Portman. “There is a tax difference […] a trillion dollars at the moment. This tax gap is partly due to the cryptocurrency problem.”
In October, 83.6% of the tax was paid “voluntarily and on time” from 2011 to 2013, according to the IRS. During this period, the US government lost an average of about $ 400 billion annually.
Portman mentioned the proposed law during a hearing at the Senate Finance Committee last Tuesday, as he addressed IRS Commissioner Charles Rettig. The commissioner said providing proper reporting rules for cryptocurrencies would “absolutely” help reduce the tax gap.
At the time, Rettig indicated her role in adding a question to their 2019 tax return forms, in which applicants were asked whether they had received, sold, sent or exchanged any financial interest in cryptocurrencies. He added that some aspects of the cryptocurrency world are “invisible by design,” including non-native tokens.
Other US lawmakers have tried to set tax reporting standards for cryptocurrencies, as technology has become a more visible part of the wallets. Last year, two members of the House of Representatives introduced the Equality in Virtual Currency Tax Act of 2020, a bill that aims to create an exemption for cryptocurrency expenditures that are considered personal transactions.