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Urgent Call to Close Tax Loopholes Surrounding Cryptocurrencies Spurs Controversy in U.S. Political Circles

U.S. Democratic Senators have urgently called on the IRS and Treasury to close cryptocurrency tax loopholes, warning of significant revenue loss.

Fri, 04 Aug 2023, 16:44 pm UTC

Time is of the essence, warn key U.S. Senators, as they strongly urge financial authorities to act on the alarming issue of cryptocurrency-related tax evasion. Leading Democratic Senators, including Elizabeth Warren, Bernie Sanders, Bob Casey, and Richard Blumenthal, are raising the alarm bells, stressing the urgency of the situation in a letter to the Internal Revenue Service (IRS) and the Treasury on August 1.

The Senators are pushing for immediate action to prevent a potential loss of nearly $1.5 billion in tax revenue for the fiscal year 2024. This call to action refers specifically to a $50 billion crypto tax gap, highlighting the significant financial risks at stake if new tax regulations are not rapidly implemented.

The concern revolves around the Senate's $1.2 trillion infrastructure bill passed in August 2021. This legislation sought to tighten tax reporting requirements for cryptocurrency brokers, yet nearly two years have passed without the rules being put into effect.

According to the Senators, the system's exploitation by tax evaders, with the assistance of crypto intermediaries, is draining billions from the U.S. government each year. They argue that the IRS and Treasury must act swiftly to prevent the continuation of these unscrupulous practices.

Despite the bill's enactment, the Treasury and the IRS have not yet released the new tax rules. Though they have until the end of the year to do so, lawmakers insist that the regulations must be in place much sooner to curb ongoing abuses.

This call for action has put Senator Warren in the spotlight, particularly as she has been a vocal critic of the cryptocurrency industry and has incorporated an "anti-crypto army" into her re-election campaign. Meanwhile, Senator Sanders has been more reserved, though supportive of Warren's attempts to tighten regulations.

Interestingly, a recent poll by Grayscale Investments indicates that the majority of both Democrats (59%) and Republicans (51%) see cryptocurrencies as the financial future. This sentiment suggests that Senator Warren's anti-crypto stance may not resonate with a majority of voters.

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