The Biden administration submitted documents showing that the United States expects to receive a hefty capital injection thanks to the application of new crypto tax reporting rules, starting in the 2023 fiscal year.
What Happened: On Monday, President Joe Biden submitted his budget proposal for the 2023 fiscal year, while the U.S. Treasury Department published its revenue explanations. According to the estimates, the U.S. government stands to bring in about $11 billion in revenue over the next 10 years — and nearly $5 billion next year only — thanks to the changes to the regulation on financial accounting and reporting requirements for cryptocurrencies such as Bitcoin BTC/USD.
See Also: IS REGULATION BAD FOR CRYPTO?
The Biden administration expects to generate $6.6 billion in revenue between 2023 and 2032 from applying the mark-to-market rules to the actively traded cryptocurrencies. The mark-to-market system establishes the value of assets by taking into account current market conditions, as opposed to using the purchase and sale price of the asset — which could be higher or lower than fair value.
In other words, it is a rule that allows taxing unrealized gains, forcing taxpayers to pay when their cryptocurrencies skyrocket even if they do not sell.
New Proposed Requirements: Furthermore, the new rules also increase revenue by requiring U.S. residents to report any of their offshore accounts with a balance exceeding $50,000. The United States Treasury Department hopes that this rule will prevent U.S. taxpayers from concealing their assets and taxable income through the use of offshore cryptocurrency exchanges and wallet providers.
Lastly, the new tax laws require U.S. banks and financial institutions to report to the Internal Revenue Service the value of the holdings of non-residents and foreign business owners.
This measure is meant to prevent the creation of entities that allow for avoiding U.S. tax reporting, and is expected to result in $2 billion of additional revenue in the first 10 years of its application.
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