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Joe Biden’s budget proposes new requirements for crypto reports

President Joe Biden’s 2022 budget bill contemplates several new crypto reporting requirements, according to a pair of documents released Friday.

The budget released Friday, the first for the Biden administration, includes two proposals that would give the Treasury Department additional requirements on what kind of information financial institutions must report to the Internal Revenue Service (IRS) or other sub-departments of the Treasury.

The first proposal, mentioned in the White House budget, would expand the broker’s information reports regarding cryptocurrency assets.

A Treasury Department document provided more context, saying the proposed change would “expand the scope of reporting by brokers” by allowing them to share information between different jurisdictions that have partnered with the US.

“The proposal would require brokers, including entities such as US crypto asset exchanges and hosted wallet providers, to report information related to certain passive entities and their substantial foreign owners when reporting regarding crypto assets held by those entities in an account with the broker”.

Gross income, sales, and “substantial foreign owners” in passive entities would be included in these reports.

The proposal would go into effect for returns filed after December 31, 2022, according to the document.

“Tax evasion through the use of crypto assets is a fast growing problem. Since the industry is completely digital, taxpayers can transact with overseas cryptocurrency exchanges and wallet providers without leaving the United States”, the Treasury Department document said as an explanation of the proposal.

The 2022 budget adds several other crypto reporting requirements, according to the Treasury document.

The second proposal would introduce a “comprehensive financial account reporting” structure for tax compliance purposes, in which financial institutions report data on user accounts with a breakdown of the different types of transfers above the minimum threshold of 600 USD. This would include crypto asset exchanges and custodians.

“Separately, the reporting requirements would apply in cases where taxpayers purchase crypto assets from one broker and then transfer the crypto assets to another broker, and companies receiving crypto assets in transactions with a fair market value of more than $10,000 would have to report such transactions”, the proposal said.

The budget comes just over a week after the Treasury Department proposed that financial institutions and other businesses that receive transfers worth more than $10,000 in cryptocurrency report them to the IRS. The proposal is also similar to a proposal from the Financial Crimes Enforcement Network.

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