Because cryptocurrencies are anonymous and global in nature, they have increasingly become the currency for both legitimate and illegal cross-border transactions, including money laundering, said IRS Commissioner Charles Rettig to lawmakers earlier this week.
Rettig is seeking broader authority to collect information on digital currency transactions in order to make sure that taxpayers report and pay what they owe.
"I think we need congressional authority," Rettig said during a hearing before the Senate Finance Committee. "We get challenged frequently, and to have a clear dictate from Congress on the authority of us to collect that information is critical."
He noted that cryptocurrency transactions, by design, are often "off the radar screens," while noting that the most recent market cap in the crypto world exceeded $2 trillion and more than 8,600 exchanges worldwide.
"We do need additional tools and we absolutely need additional resources,” Rettig said.
The Biden administration has proposed requiring IRS reporting for cryptocurrency transactions with a fair market value of more than $10,000, which would go into effect at the end of 2022 if implemented.
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly, including tax evasion, the U.S. Treasury Department said in statement about implementing the tax compliance initiative in Biden’s American Families Plan.