Ohio senator seeks clarity on crypto tax reporting in proposed law

An Ohio Republican lawmaker is preparing legislation that allegedly aims to prevent US citizens from dodging taxes on their crypto earnings.

In an interview with CNBC’s Squawk Box today, Senator Rob Portman said he hoped to introduce a bipartisan bill after the next congressional recess that would address the problem of many crypto users in the US not paying taxes. The senator said lawmakers “don’t have the final bill yet” and “are still pulling in information” on the topic. However, he claimed that both Republicans and Democrats were interested in closing the tax gap regarding crypto.

“The idea is to have better information about cryptocurrency, and to better define it for tax purposes,” said Portmand. “There is […] currently a trillion dollar tax gap. Part of that tax gap is due to the cryptocurrency problem. “

According to data from the Internal Revenue Service, or IRS, in October, 83.6% of taxes were paid “voluntarily and on time” from 2011 to 2013. During this period, the US government lost an average of about $ 400 billion a year.

Portman mentioned the bill last Tuesday during a Senate Finance Committee hearing, addressing IRS Commissioner Charles Rettig. The commissioner said providing appropriate cryptocurrency reporting rules would “absolutely” help close the tax gap.

At the time, Rettig cited his role in adding a question to the 2019 tax return forms asking if they had received, sold, shipped or exchanged any financial interest in cryptocurrencies. He added that certain aspects of the crypto world were “not visible by design,” including intangible tokens.

Other US lawmakers have sought to set standards for crypto reporting on taxes as the technology became a more prominent part of wallets. Last year, two House members introduced the Virtual Currency Tax Fairness Act of 2020, a bill aimed at imposing an exemption for crypto spending qualifying as personal transactions.