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Tax frauds cost the US more than previously thought – and Bitcoin is part of the problem, said the IRS commissioner.

The Internal Revenue Service may miss collecting about $ 1 trillion a year from taxpayers who do not pay their full payment, Charles Rettig, commissioner of the tax collection agency, said Tuesday.

Rettig told members of the Senate Finance Committee: “It is not uncommon to believe that the actual tax difference is accessible and possibly in excess of $ 1 trillion.

“We were really under attack. There is no other way to say that, ”he then added.

Sen. Ben Cardin, a Democrat from Maryland, said the $ 1 trillion figure was “shocking”.

‘We were really under attack. There is no other way to say that. ”

– Internal Revenue Service Commissioner Charles Rettig

The number itself is enormous, but Rettig’s own estimate during Tuesday’s hearing on the federal tax gap – the difference between legal debt tax and actual tax payable – is a fix. change more strongly than the forecast of the IRS itself.

Rettig says the agency’s existing estimates for tax spreads read like they were “from the dark age”. Most recent official IRS estimates said that each year from 2011 to 2013, taxpayers could not pay $ 441 billion in taxes. IRS compliance efforts and late payments narrowed the annual split to $ 381 billion.

A lot has changed since then, Rettig explained, starting with the rise of cryptocurrencies.

The IRS calculates virtual money like Bitcoin

and Ether

like property. When the owner gets profits from the currency, the IRS says it follows the rules of capital gains – but the IRS must know about the transactions before it can be taxed.

In recent years, the IRS has increased enforcement of crypto tax compliance, most recently ask for a court order for account information for users at a digital exchange.

Foreign income, such as foreign accounts, and income from illegal sources also contribute to the tax gap, Rettig said.

Less than a month ago, IRS researchers were some of the authors of a new study be considered for tax evasion and pointing to the richest taxpayers.

Underreporting for taxpayers in the lower half of the income ladder rose 7% as researchers re-examined returns using more stringent methods. It was up 21% for the top 1% of earners. Researchers see foreign accounts and money transfer entities as tactics to hide wealth.

“We’re against more complex members of the community, practitioners and others, and the tools they’re using,” Rettig said on Tuesday.

‘The IRS is against its staff and shrinking budgets, which means it is doing less complex audits to recoup the cash.’

The IRS is also against shrinking staff and budgets, which means the agency is working less complicated audit to recover cash. Over the past 10 years, the IRS has dropped 17,000 members in its enforcement wing alone, Rettig said. “That has to be influential and it’s true,” he told lawmakers.

That’s where the federal budget comes in. President Joe Biden is driving big spending on infrastructure, this will be supported by a corporate tax increase.

His administration recently issued a budget proposal that would dedicate $ 13.2 billion to the IRS. If enacted, that would be a 10.4% increase from this year’s level, according to the Center for Tax Policy.

The bottom line of the IRS budget push is increased scrutiny on taxpayers and wealthy corporations, the White House. said last week. This money is meant “to strengthen scrutiny of high income and corporate tax returns, ensure that the rich and well-connected will pay what they owe and play according to the same rules as everyone else.”

If it is successful, the agency’s budget will increase approximately 1 million dollar.

With that money, on Tuesday, Rettig said he could do things like hire 4,875 more employees in the agency’s enforcement department.

Rettig said on Tuesday, not IRS employees doomed to tax fraud. “Our people are outraged by people who don’t comply.”



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