Increased IRS Funding and New Reporting Requirements

The budget includes $6 billion in discretionary spending (in addition to the $72.5 billion in mandatory
spending) over the budget window to boost IRS enforcement by, among other things, nearly doubling
the number of the Service’s employees. Banks would be required to annually report the gross inflows
and outflows of a taxpayer’s account, with a breakdown for physical cash, transactions with a foreign
account, and transfers to and from another account with the same owner. This would apply to all
business and personal accounts from financial institutions, including bank, loan, and investment
accounts, except for accounts below a “low de minimis gross flow threshold” of $600 or fair market
value of $600.

These reporting requirements would also apply to “crypto-asset exchanges and custodians.” Specifically,
reporting requirements would apply when taxpayers buy crypto-assets from one broker and then
transfer the crypto assets to another broker. Businesses that receive crypto assets in transactions with a
fair market value of more than $10,000 would have to report such transactions.
Comment: The assumption is that cryptocurrency is a large part of the “tax gap” and, if closed, it would
raise over $700 billion in the next ten years.

Authored by:
Dr. John Connors, J.D., CPA, LLM
Tax Educator’s Network, LLC
[email protected]
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