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Directing their attention towards the United States' legislative powerhouses, a crucial call has been made to the nation's top financial institutions. Representatives Brad Sherman of California and Stephen Lynch of Massachusetts, both members of the Democratic Party, are urging the Internal Revenue Service (IRS) to strengthen its oversight of cryptocurrency users, ensuring strict adherence to tax regulations.
In a strongly-worded communication to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel, these influential Congressmen emphasized the urgent need for expedited implementation of tax-reporting requirements specifically tailored to the growing sector of digital assets.
This appeal follows the passage of the 2022 Infrastructure Investment and Jobs Act, which imposed new tax reporting responsibilities on cryptocurrency firms. As a result, these firms are now required to diligently record and provide the IRS with information regarding customer transactions. In response, the Treasury Department announced in December that firms would not be expected to fulfill these obligations until a clear regulatory framework was established.
However, despite the pressing need, this regulatory framework has yet to materialize. Sherman and Lynch are therefore urging the IRS and the Treasury Department to promptly establish these regulations in order to tackle potential tax evasion within the rapidly evolving cryptocurrency sector.
The Congressmen strongly believe that transaction reporting by crypto firms will play a vital role in fostering tax compliance within the industry. This perspective aligns with observations outlined in a September 2020 report by the Treasury Inspector General, which highlighted the IRS's challenges in identifying taxpayers engaged in virtual currency transactions due to the absence of third-party reporting that specifically identifies such activities.
Undoubtedly, this is a critical moment for digital currencies and the future of taxation. The public and the crypto industry will closely observe how the US government responds to this urgent call for enhanced tax compliance.
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