The United States Internal Revenue Service is proposing new tax reforms in order to regulate crypto investments in the U.S. with the most recent notice sharing tax obligations related to the marijuana industry.
The notice, signed by IRS Small Business/Self-Employed Division Commissioner De Lon Harris, reflects the priorities of the United States federal agency to ensure cryptocurrency tax compliance among local businesses that grow, distribute and sell cannabis.
Commissioner Harris stated that the IRS is committed to enforcing its top priorities in the enforcement of cryptocurrency laws. This statement is in line with the Senate’s July 2021 proposal to tighten reporting and taxation rules for businesses that deal in cryptocurrency. Harris says:
“Those who use [cryptocurrencies] must understand that the IRS regards it as property and that gains are taxable.”
The IRS commissioner also recommended that cannabis businesses partner with reliable exchanges to convert cryptocurrencies into U.S. Dollars.
Businesses have not been asked by the IRS to disclose high-value crypto transactions. For every transaction exceeding $10,000, however, the IRS will require that companies file Form 8300.
Related: US lawmakers propose digital assets for the ‘wash sale’ rule.
Recent amendments were made to the Senate’s bipartisan Infrastructure Deal, which saw them propose means to raise $28 billion through taxing crypto transactions and investments.
Similarly, Democrats in the House of Representatives have proposed tax initiatives to increase the tax rate for long-term capital gains. The law, if approved, will raise crypto taxes by 5% for “certain high income individuals”.
Cointelegraph’s report also suggests a surtax at 3.8% on net investment income to raise the tax rate up to 28.8% for selected investors.
The new tax plan will also impose the wash sale rule on cryptocurrency and other digital assets. This prevents investors from being able to claim capital gains deductions. U.S. lawmakers believe that crypto investors are manipulating their portfolio’s capital gains by using wash sales.