U.S. Senators Elizabeth Warren and Angus S. King, Jr. are urging the U.S. Treasury Department and the Internal Revenue Service (IRS) to expedite implementation of recently proposed tax reporting rules for cryptocurrency brokers.
In a joint letter to the two regulators, the senators expressed concern about a two-year delay in enforcing the rules, which is expected to cost the federal government billions in tax revenue.
Experts estimate that the IRS will have lost approximately $50 billion annually as of 2022 due to crypto traders’ lack of understanding or deliberate avoidance of tax implications.
New crypto tax rules
Lawmakers’ concerns stem from recently proposed regulations by the Treasury Department and the IRS, which aim to regulate the vast and complex world of cryptocurrency trading and tax reporting.
The senators praised the content of the proposed regulations – particularly the definition of “brokers” and “digital assets” in the rule – because they define brokers as any party that facilitates the sale of cryptocurrency while retaining the identity of the seller and the nature of the transaction.
Meanwhile, “digital asset” refers to a digital representation of value recorded in a cryptographically secured ledger or similar technology.
However, lawmakers strongly opposed the planned 2026 effective date.
Billions in potential tax revenue
The senators argued that the delay violates the Infrastructure Investment and Jobs Act of 2021’s directive for new reporting requirements for crypto brokers for all tax returns filed beginning in 2024.
They added that the Joint Committee on Taxation predicts that these requirements could generate significant tax revenue in the early years – resources that would be lost due to the delay.
The senators wrote:
“Now is the time to take action.”
The lawmakers emphasized that further delays could open doors for crypto lobbyists to undermine government efforts to regulate the fast-growing and largely uncontrolled sector.
Both Warren and King called for swift implementation of the proposed rule and urged the agencies to update them on their efforts by October 24, 2023.
The report that US lawmakers are urging the Treasury Department and the IRS to speed up the implementation of crypto tax rules by two years appeared first on CryptoSlate.