A Republican senator in Ohio is reportedly drawing up draft legislation which would introduce stricter measures to prevent tax evasion with digital currency dealings.
In the latest example of a proposed toughening of the rules around digital currency income, Senator Rob Portman said he hoped the bill would attract bipartisan support, as a measure for tackling the problem of undeclared cryptocurrency trading gains.
"The idea is to have better information reporting on cryptocurrency, and to define it better for tax purposes," says @SenRobPortman on #crypto. "We hope to introduce it on a bipartisan basis–it is one of the issues we ought to be addressing to try to close that tax gap." pic.twitter.com/2mGWUsjtJE
— Squawk Box (@SquawkCNBC) April 20, 2021
While he noted that the bill was still at an early stage, and that more work needed to be done to pull together information on the best approach, he said both Democrats and Republicans had expressed their support for measures to close the digital currency tax gap.
“The idea is to have better information reporting on cryptocurrency, and to define it better for tax purposes. There is…a trillion-dollar tax gap right now. Some of that tax gap is attributable to the cryptocurrency issue,” Portman said on CNBC’s Squawk Box.
According to IRS data, 83.6% of taxes were recovered “voluntarily and on time” between 2011 and 2013. However, this still accounts for a loss of as much as $400 billion over the period, and the expectation is that taxable crypto gains are currently much less frequently reported to the authorities.
The proposed bill was met with support from IRS Commissioner Charles Rettig, who said the clarification of reporting rules in law would “absolutely” help in tackling the tax deficit.
Rettig went further, suggesting that some areas of the cryptocurrency sector were opaque “by design,” meaning there was a need for legislation to introduce greater transparency around taxable cryptocurrency gains.
The proposed measures in Ohio are only the latest steps taken by lawmakers in the U.S. and elsewhere to firm up the rules around tax disclosures for digital currency income.
The bill is expected to take some time to put together, before beginning its legislative journey.
See also: Rep. Patrick McHenry discusses “Blockchain Policy Matters” with Bitcoin Association’s Jimmy Nguyen
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