IRS chief: Agency needs more authority to regulate cryptocurrency

IRS Commissioner Charles Rettig said Tuesday that the agency needs more authority from Congress to issue regulations relating to information reporting about cryptocurrency.

“I think we need congressional authority,” Rettig said at a Senate Finance Committee hearing. “We get challenged frequently, and to have a clear dictate from Congress on the authority of us to collect that information is critical.”

Policymakers have said that they think the proliferation of cryptocurrencies in recent years could mean that the IRS’s official estimates of the amount of unpaid taxes are understated. The Biden administration and lawmakers have expressed interest in increasing the reporting requirements about cryptocurrency transactions in an effort to increase compliance with tax laws.

Biden has proposed, as part of his American Families Plan, requiring crypto asset exchanges to report to the IRS information about account activity. The plan also calls for businesses to report receiving cryptocurrency worth more than $10,000, in a manner similar to how they currently report cash transactions above that amount.

Sen. Rob Portman (R-Ohio), who asked Rettig about cryptocurrency during Tuesday’s hearing, has said he is working on potential legislation on reporting rules for virtual currency.

Rettig said that most cryptocurrencies “are designed to stay off the radar screen.” 

When it comes to tax enforcement relating to cryptocurrency, “we’re very active in both the civil and the criminal enforcement world,” but the IRS needs additional tools and resources from Congress, Rettig said.