President Biden’s newly released budget plan for the fiscal year 2023 discloses that he wants to earn additional tax revenue by enacting new crypto tax reporting laws. The breadth of the proposed rules is revealed in a revenue explanation provided by the US Treasury Department in conjunction with the proposal.
According to the White House, the government may save up to $11 billion over the next decade by “modernising” financial accounting and reporting standards for digital assets. In the short term, the government expects to raise about $5 billion in 2023 alone. The Biden administration anticipates that adopting mark-to-market regulations to cryptocurrency might result in $6.6 billion in tax revenue between the fiscal years 2023 and 2032.
The “mark to market” rule is a method of valuing assets that takes current market circumstances into account rather than the asset’s acquisition price. The government can now tax unrealized gains. As a result, taxpayers will be required to submit tax returns if the value of a cryptocurrency rises, even if they do not sell.
Furthermore, the Biden administration would force banks and other financial institutions to exchange information with the IRS regarding the net worth of non-residents and foreign owners of certain corporations. According to the Treasury, this will apply to anybody who attempts to avoid tax reporting by establishing businesses through which they can act. The agency estimates that this will add $2 billion to the government’s coffers over the next decade. In addition, the government proposed a new regulation requiring any American with more than $50,000 in offshore accounts to reveal their assets. This may affect cryptocurrency holders as well as the Treasury Department, bringing in $2.2 billion in income over the next decade.