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$5 Billion In Revenue from New Crypto Tax Rules in 2023 – Biden Plans

Monday's budget proposal was released by the president....
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The President Biden’s 2023 budget proposal proposes several accounting and tax reporting methods for digital assets. According to the administration, this could result in $11 billion in revenue per decade.

It’s March 28, ahhh! It’s spring, Chris Rock’s phone buzzes like a bee and federal agencies are ready for funding.

They first need to have money, in the form tax revenue.

Today, U.S. President Joe Biden submitted his budget proposal to the 2023 fiscal year. This was in addition to the revenue explanations from the U.S. Treasury Department. According to the administration, the U.S. can generate approximately $11 billion in revenue over 10 year–and almost $5 billion next-year–if it “modernizes” its financial accounting and reporting methods to digital assets.

Biden Administration expects $6.6 billion in revenue for the 2023-2032 tax years, based on applying mark-to market rules to “actively traded” cryptocurrency. Mark to market is a method of valuing assets that takes into consideration current market conditions. It stands in contrast with using the asset’s purchase price, which can be higher or lower than its fair value. It’s a method of taxing unrealized gains. This means that the taxpayer is responsible for ETH’s increase in value from $3,000 to $4,000, even if she does not sell.

Second, Uncle Sam wants to increase revenue by requiring U.S. citizens to report offshore holdings exceeding $50,000.

The Treasury states that “the global nature of digital asset markets offers U.S taxpayers opportunities to conceal assets and taxable earnings by using offshore digital currency exchanges and wallet providers.” The Treasury believes it can collect $2.2 Billion over the next ten years by tightening its reporting requirements.

The administration also wants U.S. financial institutions and banks to provide information to the Internal Revenue Service regarding the value of foreign and non-resident holdings of certain business entities. Treasury says this will also impact residents and citizens who, according to Treasury “tried to avoid U.S. taxes reporting by creating entities through whom they can act.”

Treasury writes, “To counter the potential for digital assets being used for tax fraud, third party information reporting will be critical to identify taxpayers and encourage voluntary tax compliance.” This measure will generate $2 billion more revenue in 10 years, according to the administration.

The administration has one more change it is considering, but it is not seeking an increase in revenue. The administration believes that crypto loans should be treated the same as other lending markets. In which securities loan transfers are not subject to gain or losses, they can also be used for capital gains. Although crypto lending products offer higher yields than standard interest rates banks, they have been criticized by federal and state securities regulators.

The budget is a proposal of changes that would take effect January 1, 2023. The details will be worked out by Congress and the Administration over the next six months.





© 2022 The Daily Encrypt. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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