Biden Administration Pushing for Foreign Tax Reporting in Reconciliation Budget Bill
The Biden White House wants a crypto version of the G20’s ‘Common Reporting Standard’ in order to sniff out tax dodgers in the crypto world
- Two bills are currently in play: a $3.5 trillion reconciliation bill and a $1.2 trillion infrastructure bill
- The budget bill is currently going through a reconciliation process, a rare parliamentary procedure that makes it filibuster proof
Reports say that the White House is looking to create a framework to force US-based crypto exchanges to share information about non-US users in order to entice foreign registered crypto exchanges to share information on US-users.
A similar scheme already exists in the tradfi world called the Common Reporting Standard. This obliges banks in G20 member countries to collect information on foreign account holders and pass it back to tax authorities in that person’s home country. In the crypto world, US officials believe Americans are hiding their crypto gains on offshore exchanges and would like this information from the host countries and in exchange will give up information on foreign accounts operating at US exchanges.
Language that would allow for this type of reporting is currently not present in the $3.5 trillion budget framework that is being presented as a reconciliation bill, but the White House is pushing to add it.
A reconciliation bill is a rare parliamentary procedure that makes legislation filibuster proof by allowing for it to pass with only a majority. However, this can only be used for bills pertaining to taxes, spending and the debt limit with a limit of twice in a year.
All this is in contrast to the $1.2 trillion infrastructure bill which contained tax reporting requirements that blockchain industry stakeholders said were “impossible-to-fulfill.” The Senate failed to pass an amendment that would narrow the scope of the blockchain component of the bill.
“At this point, given procedures agreed-upon in the Senate and House, it’s highly unlikely we’ll see changes to the digital asset payfor in the infrastructure bill.” Jackson Mueller, director of policy and government relations at Securrency, told Blockworks in an interview. “The big question is what, if any measures, will be included, and whether the legislative language will generate as much, if not more, uncertainty as to which entities and accounts are included in the IRS’ tax orbit compared to the controversy generated over the digital asset payfor in the infrastructure bill.”
Mueller expected some sort of tax compliance measures to be coming down the legislative pipe, but is not a fan surprise legislative add-ons.
“What stakeholders received from the infrastructure bill — and what they could receive, yet again, in the budget reconciliation package — is the last-minute insertion of additional tax compliance measures without providing the American public with the opportunity to respond,” Mueller said. “No matter your thoughts on what tax treatments should be applied to the crypto industry, this rushed, back-stage process is simply bad policy.”
The price of bitcoin doesn’t seem to be impacted by the coming proposed tax changes, and is currently up 2.7% during the past 24 hours according to CoinGecko.