1 Total Action(s)
IRS agreed but has not taken action to increase third-party reporting on virtual currency, as GAO recommended in February 2020. As of March 2021, IRS planned to issue guidance to address third-party reporting under section 6045 of the Internal Revenue Code on certain taxable transactions involving virtual currency by December 31, 2021. Guidance aimed at clarifying and increasing the requirements for third-party reporting would address the intent of the recommendation. On August 10, 2021, the Senate passed the Infrastructure Investment and Jobs Act, section 80603 of which, if enacted, would require third-party reporting on digital assets such as virtual currency (H.R. 3684, 117th Cong.). If enacted, this would also address the intent of the recommendation.
In general, the extent to which taxpayers accurately report their income is closely aligned with the amount of information that third parties report to those taxpayers and to IRS. Increased third-party reporting could improve tax compliance by providing IRS with better information about virtual currency transactions and by making it easier for certain taxpayers to complete tax returns.