US Senators Warn the IRS About Delaying Crypto Tax Reporting Rules
- The Democratic lawmakers warned that the IRS could lose $50 billion in revenue if the proposed rule is delayed further.
- The senators said pushing the policy would help close tax evasion loopholes for criminals.
- Senator Warren claimed crypto was a secret weapon for the Hamas group.
Some US lawmakers have urged the Treasury Department and Internal Revenue Service (IRS) to push a tax policy that would force cryptocurrency brokers to report some of their income. Seven US lawmakers, including Elizabeth Warren and Bernie Sanders, recently sent a letter to Treasury Secretary Janet Yellen and Daniel Werfel, the IRS Commissioner.
The members of the Senate condemned a two-year delay in enforcing the crypto tax reporting policy, which is expected to be implemented in 2026 for transactions in 2025. The senators claimed that a delay in the implementation of the rule could result in the IRS losing almost $50 billion in yearly tax collection and enabling criminals to continue their tax evasion strategies.
The lawmakers wrote:
While we applaud the substance of the proposed regulations and your agencies’ efforts to ensure taxpayers continue to report crypto activity, we are deeply concerned that the final rule will not become effective until 2026.
The senators added that further delay “would give crypto lobbyists even more opportunity to undermine the administration’s efforts to impose basic reporting requirements on the nearly unregulated crypto sector, at a time when the industry is already pushing to repeal the recently enacted reporting requirements.”
Senator Warren leads a pack of US lawmakers who have voiced their concerns about the crypto industry. She recently shared a tweet where she claimed cryptocurrencies are “the not-so-secret financial weapon” that funds Hamas in the midst of the organization’s conflict with Israel.
What is the proposed crypto tax rule about?
In August, the IRS and the Treasury proposed regulations for cryptocurrency tax reporting, seeking to treat cryptocurrency brokers the same as they would brokers for more conventional assets like stocks and bonds. These rules require brokers to give cryptocurrency users the information they need to file their taxes and that brokers and exchanges disclose information regarding specific cryptocurrency sales.
According to reports, the new crypto tax reporting rules were inspired by the Infrastructure Investment and Jobs Act, which was passed in 2021 and included crypto terminology to encourage brokers to report on their customers’ cryptocurrency activities.
A Treasury official stated that the department is carefully reviewing comments and that a public hearing is set for November 7. The spokesperson noted that “Treasury has worked diligently to implement the bipartisan Infrastructure Law, and the proposed regulations on the sale and exchange of digital assets by brokers will help close the tax gap and address the tax evasion risks posed by digital assets.”
There have been roughly 140 comment letters on the proposed rules thus far.
Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.
