Senators Propose Change To New Crypto Rules For Tax Reporting—Here's Who's Affected
Sens. Pat Toomey (R-Pa.) and Ron Wyden (D-Ore.) introduced an amendment Wednesday to overhaul newly proposed cryptocurrency tax-reporting requirements included in the Senate's infrastructure bill by clarifying the types of companies forced to hand over transaction information to the Internal Revenue Service, setting the stage for one of Congress’ most decisive crypto actions yet as the chamber works to finalize its $1 trillion bill this week.
In the amendment released Wednesday afternoon, Toomey, who serves as the Senate Banking Committee's ranking member, proposed specifically excluding network validators, cryptocurrency miners and other non-financial intermediaries from new regulation aimed at forcing brokers to report crypto transactions in excess of $10,000 to the IRS.
The change comes after Toomey and other GOP lawmakers criticized the draft regulations released Sunday for targeting any party facilitating cryptocurrency transactions on behalf of another person—a provision Toomey blasted as "overly broad" in a statement Monday.
The provision also fueled concerns among cryptocurrency experts that officials could use the guidance to clamp down on non-broker parties in measures that could ultimately dissuade intermediaries like cryptocurrency miners from setting up business in the United States.
Despite quickly garnering support from a handful of Republicans, including Sen. Cynthia Lummis (R-Wyo.), the amendment, which would need support from 60 senators to pass, has yet to garner public support from Democrats and even received pushback from Sen. Rob Portman (R-S.C.), whose spokesperson told the Washington Post the current provision isn't meant to target software developers or miners.
Congress' Joint Committee on Taxation estimates the original proposal would generate about $28 billion in fiscal revenue over the next decade (by giving taxpayers and the IRS more visibility into taxes owed from crypto transactions), but it's unclear how the targeted amendment would affect that figure.
“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation," Toomey said in a Wednesday statement after calling the current text "unworkable" on Monday.
Tucked deep into the Senate's 2,702-page infrastructure proposal released Sunday, the proposed cryptocurrency requirements quickly caught the eye of industry experts and lawmakers. “This should have been required a long time ago,” Eric Pierre, a Texas-based certified public accountant and owner of Pierre Accounting, told CNBC Tuesday, adding that targeted regulation could ease the complicated—and at times unclear—reporting process for cryptocurrency transactions. “There’s no real reporting or tracking mechanism, and it’s up to [tax professionals] to do a lot of subjective analysis,” he said. Several industry groups, however, came out against the unamended proposal, including the Chamber of Digital Commerce, for language they claimed was too broad and too vague in defining brokers. Even Twitter billionaire Jack Dorsey, a staunch bitcoin advocate, voiced support for the amendment efforts Tuesday, saying the bill's current language could put "unworkable" requirements on bitcoin node runners, developers and miners.
What To Watch For
A vote is expected by Friday. Senators started debating and voting on amendments to the infrastructure bill Monday evening and will continue to do so over the next few days. On Sunday, Majority Leader Chuck Schumer (D-N.Y.) said it could be "a matter of days" before the process is complete and the chamber sends a final infrastructure bill to the House for approval.Source