WASHINGTON, May 20 (Reuters) - The Biden administration's
tax enforcement proposal would require that cryptocurrency
transfers over $10,000 be reported to the Internal Revenue
Service and would more than double the IRS workforce over a
decade, the U.S. Treasury said on Thursday.
The plans were part of a Treasury report detailing the Biden
Administration's proposal to invest some $80 billion into the
U.S. tax agency through 2031 to improve compliance an revenue
"As with cash transactions, businesses that receive
cryptoassets with a fair market value of more than $10,000 would
also be reported on," the Treasury said in the report, which
noted that these assets, are likely to grow in importance over
the next decade as a part of business income.
Cryptocurrency assets currently have a market capitalization
of about $2 trillion.
The Treasury disclosure blunted a rally in the dollar value
of bitcoin on Thursday - to a 6% gain from an earlier
10% rise. The gains came a day after bitcoin fell
as much as 30% and number two digital currency ether
The reporting requirements, depending on how they are
structured, could also allow the government to gain insight
about U.S. companies that are extorted to pay hackers ransoms,
almost invariably in cryptocurrency, to regain control of their
Law enforcement and private sector cybersecurity experts
alike have complained that a lack of transparency around these
ransonware incidents contributes to their continued occurrence.
The Treasury's report said the proposed IRS investments
would add a total of more than 86,000 full-time equivalent
employees to the agency's ranks over the next decade, reversing
a long-term decline and more than doubling the 2019 IRS
workforce of 73,554 full-time equivalent positions.
It said the investment plan would allow for the hiring of
least 5,000 additional enforcement personnel over the decade.
SHRINK THE GAP
The Treasury said its proposal would shrink by about 10% the
"tax gap" that it estimates at about $7 trillion or 3% of U.S.
economic output over the next decade, raising some $700 billion
in a "conservative" estimate.
The tax gap - the difference between taxes legally owed and
those collected by the IRS - was estimated at $584 billion in
2019, according to the policy paper.
By the second decade, it estimated that the investments
would yield $1.6 trillion in additional revenue, as revenue
agents hired in prior years gain experience in dealing with
highly complex tax returns filed by wealthy individuals.
The IRS investment plan also would replace the Treasury's
1960s-era computer architecture with new
machine-learning-capable systems that will be better able to
detect suspect tax returns. IRS is the only federal agency with
computers that run on the antiquated Common Business-Oriented
Language (COBOL) system, Treasury said.
(Reporting by David Lawder; Additional reporting by Raphael
Editing by Chizu Nomiyama and Marguerita Choy)