Anti-crypto senator Elizabeth Warren has penned a letter to the Internal Revenue Service (IRS) urging them to implement strict tax reporting rules for ‘crypto brokers.’
On Aug. 2, a letter was sent to Daniel Werfel, the Commissioner of the Internal Revenue Service. New cryptocurrency tax reporting rules are being requested from Senator Warren and three other US Senators.
New Crypto Tax Rules Wanted
In addition to Elizabeth Warren, the letter was signed by Senators Bob Casey, Richard Blumenthal, and Bernie Sanders. The letter was also sent to the Treasury Department.
In November 2021, Congress passed the Infrastructure Investment and Jobs Act (IIJA). In it were rules requiring third-party “crypto brokers” to report relevant information on sales, gains, and losses to the IRS.
However, the term “crypto brokers” was very loose and highly debated among lawmakers. It included automated software systems such as validators, nodes, wallet providers, miners, and stakers.
Nevertheless, the quartet of Senators were not happy with the situation:
“Nearly two years have passed since the law was enacted, and the implementation deadline is less than six months away – but Treasury has yet to publish proposed rules,”
“Without quick action, your agencies are at risk of failing to meet their congressionally-mandated deadlines for implementation of a final rule,” they added.
Learn more about how crypto taxes work in the US: The Ultimate US Crypto Tax Guide for 2023
They cited the Joint Committee on Taxation, which claims that the IRS risks missing out on roughly $1.5 billion in tax revenue for the 2024 fiscal year.
Senator Warren and her anti-crypto backers claimed that industry tax evaders will continue to take money from the US government.
“Given the chance, tax evaders and the crypto intermediaries willing to aid them will continue to game the system, exploit loopholes, and siphon off billions of dollars a year from the U.S. government.”
The politicians want these new rules published ahead of the Dec. 31, 2023, deadline. They also want a response to their letter no later than Aug.15.
IRS Updates Tax Rules
On July 31, the IRS issued a Revenue Ruling clarifying how income earned from crypto staking should be treated for taxation purposes.
Moreover, it stated that American crypto investors must report staking rewards as gross income in the year they were received.
The IRS said that the “fair market value” of staking rewards should be included in annual income. Additionally, it should be determined when the assets are received.
“The fair market value is determined as of the date and time the taxpayer gains dominion and control over the validation rewards,” it stated.
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