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“Most crypto, virtual currencies are designed to stay off the radar screen,” explained Charles Rettig.
Internal Revenue Service Commissioner Charles Rettig chastised Congress for failing to address the issue of many U.S. citizens failing to pay taxes on cryptocurrency.
In a Senate hearing on the IRS’ fiscal year 2022 budget on Tuesday, Rettig stated that the agency would likely need a “clear dictate from Congress” to oversee cryptocurrency. In an effort to address the issue of non-reporting or underreporting taxpayers, the IRS has budgeted $32 million for “crypto-related enforcement operations” and $41 million for cybercrime.
“The authority for us to collect that information is critical,” said Rettig. “The most recent market cap in that world — in the crypto world — exceeded $2 trillion and more than 8,600 exchanges worldwide, and by design most crypto, virtual currencies are designed to stay off the radar screen, so we will be challenged.”
Rettig was replying to Ohio Senator Rob Portman, who said in April that he planned to present a bipartisan measure to address the issue of many crypto users in the United States failing to pay taxes. The IRS commissioner also stated that “non-filer virtual currency” would be one area where the agency will focus in the future to reduce the tax gap, and he “would appreciate the opportunity” to cooperate with lawmakers on the matter.
As part of President Joe Biden’s American Families Plan, Treasury Department officials urged on crypto exchanges and custodians to record transactions worth more over $10,000 to the IRS last month. The agency currently has no independent verification of such transactions, potentially leading to a widening tax gap.
Rettig added at the hearing:
“We do need additional tools, and we absolutely need additional resources.”
According to data from the IRS in October 2020, 83.6% of taxes were paid “voluntarily and on time” from 2011 to 2013. However, the Treasury Department has projected that the tax gap could reach roughly $7 trillion total over the next decade should the government fail to take action.