Congressmen slam crypto businesses for "tax gap" in Treasury letter

By: Mark Jessy

June 6, 2023 8:11 AM

Sherman and Lynch wrote to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel voicing their worries about crypto's tax compliance methods.

Congressmen Brad Sherman and Stephen Lynch have written a letter to the Treasury and IRS secretaries, requesting that tax regulations be established for the cryptocurrency industry.

Congressmen Sherman and Lynch wrote→ to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel to express their displeasure with the current state of tax compliance in the cryptocurrency industry, citing issues including:

"That sector of the economy (cryptocurrency) has been a key contributor to the United States' tax gap for some time now."

The pair referenced a report from September 2020 by the Treasury Inspector General for Tax Administration (TIGTA) that said the IRS lacked the data it needed to identify taxpayers who were in favor of cryptocurrencies.

Additionally, taxpayers were obligated to record crypto transactions beginning in 2023 via the Infrastructure Investment and Jobs Act (Bipartisan Infrastructure Bill) signed into law by President Joe Biden in November 2021. The lawmakers, however, said that "the proposed regulations have yet to be promulgated."

Congressmen Sherman and Lynch have already demanded the issuance of new laws to "close the tax gap and bring the cryptocurrency industry into full tax compliance" before the end of 2023.

Initially proposed as part of Biden's FY2024 budget in March 2023, the administration's efforts to impose a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners were revived in May. A tax on cryptocurrency mining was proposed in April, but it was left out of legislation in May that dealt with increasing the debt ceiling in the United States.

While the 30% tax on cryptocurrency mining has calmed some fears, some who support cryptocurrencies think it will only be in place temporarily. Nic Carter, the co-founder of Coin Metrics, thinks the administration will try to impose the tax again in the future as part of an omnibus measure.

White House officials have not commented on whether or not they intend to pursue the DAME tax in response to Cointelegraph's request.