IRS chief asks Congress for authority and resources to regulate cryptocurrencies

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Internal Revenue Service Commissioner Charles Rettig on Tuesday asked Congress for new authority and resources in order to regulate cryptocurrencies for better tax collection and to avoid frauds and scams.

Rettig asked for the new measures during a Senate Finance hearing Tuesday to examine President Joe Biden’s 2022 budget proposal, which calls for $41 million to expand anti-cybercrime efforts and $32 million for cryptocurrency-related enforcement operations and additional tax information reporting for businesses that receive cryptocurrency that has a fair market value of over $10 million.

“I think we need congressional authority. We get challenged frequently and to have a clear dictate from Congress on the authority of us to collect that information is critical,” Rettig said in response to a question from Republican Sen. Rob Portman of Ohio.

“The most recent market capitalization in that world, the crypto world, exceeded $2 trillion and more than 8600 exchanges worldwide,” he added.

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Rettig said that most virtual currencies, such as Bitcoin or Ethereum, are designed to being hidden and difficult for the IRS to track.

Most cryptocurrency transactions are pseudoanonymous because they obscure the identity of those trading coins, but the blockchain technology that enables cryptocurrencies uses a public ledger that allows for less privacy than some may realize.

Cryptocurrencies make up a small share of business transactions, the Treasury Department has noted, but a huge increase in cryptocurrency investing in the past year suggests digital coin use could become more frequent.

The Treasury Department last month already called for requiring all transfers of more than $10,000 worth of cryptocurrency to be reported to the IRS as part of the Biden administration’s proposals to boost tax compliance.

Rettig, who was nominated to lead the IRS by former President Donald Trump in 2018, said that without funding from Congress, it would not be able to follow through on programs that the agency is working on to better regulate cryptocurrencies and protect the public from virtual currency-related crimes and frauds.

“We do need additional tools, and we absolutely need additional resources,” said Rettig.

In 2019, under Trump, the IRS budget called for a reduction in staffing of 2,200 employees. Rettig’s budget request for fiscal year 2020 planned to eliminate an additional 1,800 employees.

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Biden’s IRS budget asks for at least 5,000 new personnel to be hired for tax enforcement purposes, with 15% increases in hiring every year.

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